UK - The First Quench Pension Scheme is in the process of entering the Pension Protection Fund (PPF) assessment period, following the collapse of the sponsoring employer First Quench Retailing, formerly known as Threshers.
KPMG, the administrators for First Quench, said the trustees of the pension scheme are contacting members as a routine part of the administration process, while KPMG had fulfilled the legal requirement of notifying the PPF of the insolvency of the sponsoring employer through a section 120 notice.
A spokesperson for KPMG confirmed the pension fund had entered the PPF assessment period to see whether it has enough assets to secure pension benefits at a level equal or higher than the PPF compensation. It suggested the process is likely to last around a year.
It added the legal position of the pension fund is that First Quench is the "principal and only employer". However, it is understood that Pension Corporation still owns a 25% stake in First Quench Retailing following the sale of Threshers to private equity firm Vision Capital in 2007.
Pension Corporation took brief control of the pension scheme for two months that year while it was owner of Threshers. But once it had sold a 75% stake of the company in autumn 2007, it then took on the role of asset manager for the pension scheme, which it still holds, according to officials. At that time Pension Corporation Investments claimed it had turned the scheme's £24m deficit into a £10m surplus between June and August 2007. (See earlier IPE article: Novel approach hits problems)
Edmund Truell, chief executive of Pension Corporation, told IPE it appointed its own trustees to the scheme in August 2007, as they sold equities at 6,600 and hedged liabilities to improve the funding level from 70% to more than 100%. Truell declined to comment on the exact figure of the pension scheme's funding position now.
With the First Quench Pension Fund now entering the PPF assessment period, Truell noted: "We have extensive experience in assessing credit risk and were concerned about the covenant here. We are keen to work with the administrators to find a solution to manage the [First Quench] scheme so that there is little or no impact on the members' benefits."
A spokesman for the PPF said First Quench had not yet entered the assessment period. But he confirmed that when any scheme enters this process it does look at the employer's position when determining whether the pension fund can secure the required level of benefits.
The PPFpointed out that "the key to this is whoever is designated as the sponsoring employer of the pension scheme".
The takeover and subsequent sale of Threshers by Pension Corporation is still the subject of two ongoing investigations by the Accountancy and Actuarial Discipline Board (AADB) on advice provided by actuaries and consultants. (See earlier IPE article: Discipline board investigates actuaries about First Quench fund and AADB to test Mazars' role in PensCorp/ Thresher deal)
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