US firm gets boost from wound-up UK scheme
UK – US energy services company McDermott International has received about $38m (€29.3m) from its “over-funded” UK pension scheme that was wound up in 1998.
The occupational pension regulator said such a move was “not common”.
A spokesman for McDermott told IPE: “The former employees' pensions were guaranteed in full, and after such, the plan remained over-funded.”
The withdrawal reflected “McDermott’s retrieving their portion of this over-funded amount”. But he declined to comment on details like the size of the pension scheme and the trustees’ reaction.
"Completing this effort represents a significant accomplishment," Bruce Wilkinson, McDermott’s chairman and chief executive was quoted as saying.
"We spent several years negotiating with represented plan participants and obtaining the necessary approvals from the UK pension authority to reach this goal. It's great to achieve this milestone."
A spokeswoman for the Occupational Pensions Regulatory Authority, OPRA, said applications to access surpluses from wound-up pension schemes were “not common”. They generally applied to small, self-administered pension schemes.
OPRA more regularly deals with wound-up schemes in deficit.
She explained that under section 76 of the Pension Act 1995, trustees of a wound-up scheme with reserves can apply for surplus funds to be returned to employers. She confirmed that McDermott had applied.
Withdrawals are allowed only if the pension authority is satisfied that the requirements set by law are met. In addition, the returned surplus is subject to UK taxation, she also said.
The process of returning surplus to employers can take up to five years but the average time span for large pension schemes can be around 20 years, she said.
OPRA, however, has set about speeding things up.