The Pensions Regulator (TPR) was right to use its powers to seek financial support from ITV for members of the Box Clever pension scheme, a judge had ruled.
In a judgment published today (18 May) after a two-week hearing in January the Upper Tribunal ruled TPR was right to requiring the broadcasting company to provide financial support for the pension scheme.
But ITV has already said it will be appealing the decision.
Box Clever was a joint venture combining the rental businesses of ITV, known at the time as Granada, and Carmelite, previously known as Thorn. Its pension scheme has around 2,800 members and a deficit of some £115m.
The tribunal ruled it was reasonable for ITV to provide financial support for the scheme.
The judges said: "By their choice of structure for the joint venture, the shareholders extracted considerable cash from the business with no risk of recourse to their assets.
"They retained an ongoing interest in the merged business with the possibility of further value being generated if the business was successful, but without having to bear any responsibility if the business, whose strategy they continued to determine, subsequently failed."
When the joint venture went ahead employees were transferred to the new company and enrolled in the Box Clever pension scheme, which was set up to ensure that those members would continue to receive the same benefits as promised in their former schemes.
But TPR opened an anti-avoidance investigation following the collapse of Box Clever and in 2011 it issued a determination notice outlining why it was reasonable to issue financial support directions (FSDs) to five companies that formed part of the ITV Group.
A FSD requires its target to propose how they will financially support the scheme. For example, the target could assume responsibility for the employer’s liabilities to the scheme or make a lump sum cash payment into the scheme.
ITV originally went to the Upper Tribunal in January 2012 to challenge TPR’s determination to issue an FSD and began its challenge of the regulator's ability to submit additional evidence in late 2013.
At the end of July, the Court of Appeal refused permission for ITV to appeal against a ruling made in TPR's favour, to allow the introduction of new evidence in its case against the broadcaster.
Mike Birch, TPR’s director of case management, said the ruling sent a "clear message" to companies linked with defined benefit pension schemes that the regulator wouldn't hesitate to use its anti-avoidance powers where it believes it is reasonable for them to provide financial support.
He said: "We will pursue these cases for as long as necessary to protect pension savers and the Pension Protection Fund.
"This has been a long and complex case, where the targets have raised numerous legal challenges causing significant delays in an outcome being reached.
"We now hope that ITV will accept the Upper Tribunal’s findings and seek to work with TPR to put in place appropriate financial support for the scheme and deliver a good outcome for members."
But, the broadcasting company said it was "disappointed" with the Tribunal's decision.
An ITV spokesperson said: "ITV continues to believe that the case brought against it is unfair and will be seeking to appeal the decision.
"The Tribunal repeatedly stressed in its judgment that no blame or criticism should be attributed to ITV concerning the transaction, 18 years ago, that formed the Box Clever joint venture.
"There were sound reasons for implementing that transaction, which was, in good faith, regarded as being in the best interests of Granada's shareholders, employees and consumers."
maria.espadinha@ft.com
