Pensions  

Regulator must investigate AA pension scheme: union

Regulator must investigate AA pension scheme: union

One of the unions representing employees of the AA has called on The Pensions Regulator to "rigorously" investigate trustees of the pension plan after the scheme's deficit hit £622m.

In a statement on Monday (17 October), GMB urged the regulator to investigate whether the scheme trustees had behaved "in a correct and proper manner as the pension deficit rises to reach £622m".

In particular, it urged the regulator to examine trustees' conduct in relation to rules over "conflicts of interest".

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Paul Grafton, GMB regional organiser, compared the AA scheme to the BHS scheme under the ownership of Philip Green. 

"The role played by the AA pension fund trustees at the time the deficit has ballooned to £622m must be rigorously investigated and scrutinised in detail by the Pensions Regulator," he said.

"As the BHS pension deficit under Philip Green’s watch is being put under a spotlight, so must the AA deficit which is nearly twice as much. Politicians are demanding that Philip Green uses some of his personal fortune to plug the BHS pension shortfall."

He questioned whether the trustees had been "properly proactive" in protecting the fund while money had "flowed out of the organisation to the private equity owners and in interest payments to cover the debt mountain they landed on the organisation".

The call came the week after the Work and Pensions Select Committee began its inquiry into the DB sector.

The first person to appear before the committee was former pensions minister Steve Webb. Mr Webb said more should be done to ensure that companies are not paying out generous dividends at the expense of their pension schemes.

He also said encouraging DB to DC transfers could help the situation. However, he said allowing schemes to reduce benefits - which committee chair Frank Field has suggested - should be a last resort.

In its submission to the inquiry, released last week, The Pensions Regulator requested powers to require the winding-up of pension schemes at the request of trustees or the PPF, as well as punitive powers to fine employers who seek to avoid pensions obligations.

Responding to GMB's claims, AA president Edmund King said: "You can rest assured that the AA pension trustees always act with the utmost propriety and it is scandalous to suggest otherwise.

"The current size of the IAS 19 accounting deficit has more to do with the drop in the value of gilts and bonds post Brexit than anything the Trustees could or couldn’t do."

A spokesperson for The Pensions Regulator said: “We do not comment on individual cases or companies unless it becomes appropriate to do so.”

james.fernyhough@ft.com