The Pensions Regulator (TPR) has intervened in the sale of assets by a manufacturing company to ensure the proceeds have been given to the company’s pension funds.
Coats Group, a US textiles group, has agreed to pay £255m (€304.5m) into two of its UK pension funds following “anti-avoidance action” from TPR.
Nicola Parish, executive director of frontline regulation at TPR, said it was a “substantial settlement”, adding: “It shows we can and will use our existing powers against a solvent employer if that is the right thing to do… In this case, the settlement will substantially improve the funding of the two schemes and also strengthen the employer covenant supporting those schemes.”
Coats Group said in a statement that, on top of the £255m payment, it would make annual deficit-reduction contributions of £14.5m to the schemes.
The two schemes account for 90% of the company’s Total UK pension membership.
In addition, a third scheme sponsored by Coats has been offered a £74m upfront payment and £3m a year thereafter.
The trustees are yet to accept the offer, Coats said, and a TPR investigation into this scheme remains open.
TPR sent warning notices to Coats in 2013 and 2014 setting out its case for intervening to secure cash for the pension schemes.
Defined contribution (DC) pension providers have made “significant progress” on reducing fees charged to members, according a joint report from the Financial Conduct Authority (FCA) and the Department for Work and Pensions (DWP).
An independent project board was set up in 2013 to address poor value for money in DC schemes.
More than 1m DC savers are now paying less than they were three years ago, the report said.
However, progress was “unsatisfactory or unclear” for 16% of assets in contract-based schemes, and 15% of assets in trust-based schemes, the FCA and DWP said.
Richard Harrington, pensions minister, said: “I am pleased that more than 1m pension savers will benefit from our push to curb excessive charges in legacy schemes. Nevertheless, some people are still at risk of high charges, so I shall be seeking assurances from the providers of those schemes that they will be taking steps to resolve this issue.”
Andrew Bailey, chief executive at the FCA, said the regulator would be contacting providers yet to take sufficient action.
“We expect them to act swiftly to ensure good value for customers,” he said.
Elsewhere, the Merchant Navy Officers Pension Fund (MNOPF) has claimed it saved its sponsors roughly £300m in contributions over four years through the success of its investment strategy.
MNOPF has a large portion of its assets in a liability-hedging strategy, which was a “significant contributor” to its performance since March 2012, the pension fund said in a statement.
Willis Towers Watson runs MNOPF’s investment portfolio in a “delegated CIO” fiduciary management arrangement.
In the four years since, MNOPF has improved its funding ratio from 68.9% to 81%.
The trustees are targeting a 103% ratio by 2025.