Independent Labour MP Frank Field has called for quicker action from The Pensions Regulator (TPR) over the sale of Johnston Press, as the watchdog is still deciding whether further investigation is needed.
The publisher of the I and The Scotsman was acquired by JPI Media on November 17, which prompted its defined benefit (DB) scheme to enter an assessment period at the UK pensions lifeboat.
According to letters exchanged between the chair of the Work and Pensions committee and Oliver Morley, chief executive of the Pension Protection Fund (PPF), the deal was reached just two days before a pension deficit contribution of £800,000 was due to be paid to the scheme by the company.
Johnston Press was sold through a pre-pack deal, an insolvency procedure in which a company arranges to sell all or some of its assets to a buyer before appointing an administrator.
Mr Field said: "It doesn't take a genius to work out that a company that dumps its pensions liabilities just days before it has to put £800,000 into the pension fund might be up to no good. It’s clear that the PPF, which is left to foot the bill, has serious doubts about this pre-pack deal.
"TPR has promised to be quicker and tougher—now would be a good time to start."
According to the pensions lifeboat, its pension scheme has a deficit of £109m on a PPF basis, and £305m on a buy-out basis (the cost to secure all benefits with an insurance).
Mr Morley explained that the PPF doesn’t have issues with pre-pack administration in general, but does have concerns in cases where the process is misused to "dump" liabilities, including pension schemes.
In the case of Johnston Press, the PPF believes "the group actually had more than adequate cash reserves"—including to pay the pension contribution due.
Mr Morley noted the PPF doesn’t understand "why there was an apparent rush to complete the pre-pack administration'.
The PPF has referred the case to the regulator. Lesley Titcomb, TPR’s chief executive, told the committee that the watchdog’s "enquiries are ongoing" and that it is still considering "whether further investigation of the rationale for the pre-pack may be warranted".
In response to Mr Field’s statement, a TPR spokesperson said: "Pre-packs can happen at short notice, which is why our powers to act quickly to investigate and take tough action after an event are important, but it is also vital that we fully consider the facts of each case. It is not possible to launch an investigation into a pre-pack that has not taken place.
"Regulating the process leading to a pre-pack is a matter for the other agencies. Our role is to focus on a pre-pack’s impact on an employer’s pension scheme.
"We do not have the power to stop a pre-pack taking place. The Department for Business, Energy and Industrial Strategy (BEIS) is currently looking at pre-packs as part of its wider look at matters of corporate governance."