UK - Kingfisher, owner of several home improvement retail chains including B&Q, has paid its defined benefit (DB) scheme more than £100m (€114m), allowing trustees to invest in a recently launched property partnership.
In the company’s interim results, it revealed pension trustees had made a £106m investment in Kingfisher Scottish Limited Partnership in June.
This follows the transfer of around £120m worth of property to the partnership in the same month, as well as a £106m payment from the sponsor to the scheme.
In its interim report, Kingfisher said: “This follows a similar transaction in January in which property assets with a value of £83m were transferred into the partnership, followed by a group contribution (into the scheme) and scheme investment (into the partnership) of £78m.”
However, the company said that, under IAS19 accounting, the fund’s investment in the partnership did not represent a plan asset and could therefore not be used to counteract the DB scheme’s £68 deficit - down by £57m compared with July last year, but a £10m increase over the end of January.
The properties are being leased back to current occupant B&Q.
In other news, pension funds will see increasing interest from scheme sponsors in addressing deficits through the use of intangible contingent assets, such as the use of company brands, a UK law firm has suggested.
Speaking at a seminar held jointly with BNP Paribas earlier this week, lawyers from of Wedlake Bell argued that May’s deal between Tui Travel and its scheme’s trustees to take ownership of the Thomson and First Choice brands as collateral against its £400m deficit would be the first of many.
Clive Weber, head of the firm’s pensions team, explained that, with company values being increasingly tied to patents, trademarks, designs and brands, trustees would need to become accustomed to these deals as part of deficit reduction payments.
“The scale of pension fund deficits is now so great we can’t realistically expect the deficits to be filled by cash alone,” he said, arguing that intellectual property as outlined above would retain value even if a company were to cease trading.
“What is more, the valuation of intangible assets by valuation experts is becoming increasingly sophisticated, and the secondary market for this IP is now more liquid,” he added.
Wedlake Bell partner Jonathan Cornthwaite, who focuses on intellectual property law, noted that investment in intangible assets had outstripped investment in tangible assets over the past decade.
“This is a huge resource pension trustees have hardly started to tap,” he said.
Finally, ATP’s recently announced UK multi-employer trust NOW Pensions has appointed Xafinity Paymaster as scheme administrator.
Morten Nilsson, head of ATP’s international operations and chief executive-elect at NOW, said Xafinity provided them with an opportunity to access the scale and efficient delivery “critical to ensure we can provide our members with a cost-effective solution”.
Paul Bingham, the firm’s managing director, said Xafinity was delighted by its appointment, hailing ATP as one of the world’s leading pension funds.
He added: “Xafinity Paymaster has been interested in providing auto-enrolment administration since the idea was mooted by the Turner Report on pension provision in the UK.”