TPR dealing with 'gruesome' aftermath of credit crunch

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The Pensions Regulator is facing a backlog of post-credit crunch funding disputes as trustees and companies attempt to plug scheme deficits.

In an exclusive interview with PP, executive director of business delivery June Mulroy denied the watchdog was taking a more hard-line stance on funding agreements – despite a spate of public cases this year.

She said the increase in “substantial concerns” over deficits and funding agreements – including the Royal Mail and BT – was inevitable in the wake of the recession.

Mulroy also revealed the lengths to which sponsors had gone to ease the pressure of rising deficits – with one small scheme offering a dredger as a contingent asset.

“We’re now seeing the results of the credit crunch coming through, because we’re about a year in arrears,” she said. “We’re seeing some gruesome stuff – when people get a bit desperate, they’ll chuck anything into the mix.”

She said two contribution notices had been “within hours” of delivery, with people literally “on the train to the meeting” before an eleventh hour deal was agreed.

However, Mulroy expected a “bow wave” effect following the issuance of a £5m contribution notice to the Bonas Group Pension Scheme, with companies and trustees recognising the regulator is willing to use its extensive powers.

In the Bonas case, Mulroy said the key contention was whether or not Belgian parent company Michel Van De Wiele N.V. was getting value from its UK-based R&D subsidiary.

She said: “We just kept going on and on and on, trying to get to a reasonable solution and they just didn’t want to get there. And in the end we just said enough – that’s it.”

Mulroy added: “I think with this kind of regulation, where we don’t use the powers unless we have to, there will always be this period of time where people will start to say, ‘they haven’t used them until now, they won’t do it’. But of course we do.”