The Pensions Regulator has dropped its investigation into the events that led the Johnston Press defined benefit scheme into entering assessment at the pensions lifeboat, as it found no evidence that insolvency was avoidable.
The publisher of the I and The Scotsman was acquired by JPI Media on November 17 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.
According to letters exchanged at the end of 2018 between the independent Labour MP Frank Field, chairman of the Work & Pensions select 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.
In a report published today (March 11), The Pensions Regulator stated it "found no evidence to suggest that insolvency was avoidable nor that the administration was planned to circumvent payment of the deficit repair contribution, nor that there were any acts pre-dating the administration worthy of further investigation".
The administrators have also confirmed to The Pensions Regulator their enquiries have not established any previous transactions which might require further investigation by them.
The watchdog also stated that it has liaised with the administrator and the PPF "to ensure that should any new and relevant evidence be uncovered by them this will be provided to The Pensions Regulator," and this may lead to the regulator considering opening an investigation.
According to the pensions lifeboat, the Johnston Press Pension Plan 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).
The final salary scheme has 4,959 members and was closed to future accrual in 2010.
According to Nicola Parish, executive director of frontline regulation at The Pensions Regulator, as soon as the administration of Johnston Press was announced in November, the regulator opened an anti-avoidance investigation into the circumstances leading up to the deal.
She said: "This involved gathering and reviewing detailed information and liaising with the PPF, administrators and other parties.
"In February we concluded it would not be reasonable to pursue any further investigation, which could have led to either a financial support direction or contribution notice being pursued. Should new and relevant evidence be uncovered it may lead us to consider opening an investigation.
"Where pre-pack insolvencies remove sponsor support from a defined benefit scheme, those involved should expect us to investigate whether our powers can be used, particularly in circumstances where there is an association between the new owners and the previous owners or other stakeholders.
"We will not be commenting further."
maria.espadinha@ft.com
