UK - The insolvency of London's tourism agency, triggered by its £2.2m pension deficit, was the result unreasonable assumptions made by the Greater London Authority (GLA), a report by the London Assembly (LA) has found.
Examining the collapse of Visit London, the London Assembly's Economy, Culture and Sports committee was told the assumption that London & Partners (L&P) - launched as a replacement for several agencies, including VL - would become a participating employer was "madness" in light of the deficit facing the British Tourist Board pension scheme (BTB).
In a submission to the report, scheme trustees said they were puzzled by the GLA's continued assumption that the new private company would be interested in taking on the pension scheme and the previously agreed 20-year recovery plan.
The trustees said the chair of L&P, Tamara Ingram, made "very clear" during a meeting in late March that the company did not deem it commercially viable to take on obligations for the scheme.
They said: "L&P's chair also then expressed how it would have been 'madness' for a limited lifespan company such as L&P to assume responsibility for a deficit that would, on [L&P's] own wind-down, crystallise in lump-sum form and drive the company into insolvency [in the same way as would shortly happen to VL]."
The committee went on to note that the GLA's assumption - held between late November 2010 and March this year - that L&P would assume responsibility for the scheme was "not a reasonable one".
"It would only have been so if the GLA had been prepared to underwrite the scheme deficit in some way or make further funds available for a cash injection," the report concluded. "Neither was offered prior to April 2011."
Following warnings from the Pensions Regulator that it would launch proceedings against the GLA for withdrawing funding from VL, instead supporting L&P, Mayor Boris Johnson then announced a rescue of the scheme, ensuring it would not enter the Pension Protection Fund.
The Assembly's report nevertheless remained critical of the Mayor's handling of the situation, concluding: "The mayor's decision to set up a new company to promote London was not informed by a sufficiently detailed assessment of the financial and reputational risks associated with the Visit London pension scheme."