Trustees of McColl’s Pension Plans have confirmed that the Wm Morrisons Supermarkets Group has now completed the rescue of the TM Pension Plan (TMPP) and the TM Group Pension Plan (TMGPS).
As a result, both schemes have now officially left their Pension Protection Fund (PPF) assessment periods, with Alliance Property Holdings Limited (APH), a subsidiary of Morrisons now trading as McColl’s, to become the new sponsoring employer.
The schemes’ 2,000 members will also benefit from funding guarantees from the Morrisons Group, with administrators expected to continue to oversee the schemes’ operations.
In addition to this, the bailout will mean that members do not need to have a claim on McColl’s insolvency estate, which means McColl’s other creditors are also likely to receive a higher distribution than they wouldn’t have it otherwise.
Plan administrators had previously urged McColl’s Retail Group bidders to honor pension promises made to members, later confirming the plans would continue to receive support under the terms of Morrisons’ acquisition of the group.
The schemes have combined assets of £130m, with the TMGPS fully funded on a permanent statutory funding basis, while the TMPP is expected to be fully funded on a permanent statutory funding basis next year.
Commenting on the news, Morrisons Chief Financial Officer Jo Goff said: “We are very pleased to have completed the rescue of McColl’s and to be able to provide stability and continuity to the whole business and, in particular, a best result for his colleagues and retirees.
PPF Head of Restructuring, Mike Ridley, added: “We are delighted to have been able to assist McColl’s pension plan administrators in completing this plan rescue with Wm Morrisons Supermarkets Group.
“While we provide a valuable level of protection to the plans we protect, we are pleased that on this occasion both pension plans can exit our assessment period after achieving a good result for plan members and our taxpayers.”
Independent Trust Services and McColl’s Pension Plan Trustee Chair Rachel Croft also called the bailout “good news” that represents “the best possible outcome” for members following McColl’s insolvency.
“The administrators have been actively involved throughout the operation, to help ensure this success, and would like to thank Morrisons and APH for their support of the members and their commitment to executing the rescue. We will continue to work to protect members’ interests,” she said.
On top of that, PwC UK’s director of pensions, Minesh Rana, noted that bailouts from schemes such as this are “incredibly rare”, adding however that the current economic environment could see the number of companies struggling. with well-funded pension schemes increase.
He explained: “With the current economic forecast showing weaker growth and rising costs, it is possible that more businesses will find themselves struggling in the coming months.
“Historically in restructuring situations, distressed companies’ pension plans often have large deficits and this can lead to pension plans ending up in the PPF.
“However, the recent improvement in gilt yields as well as the cash contributions paid for many years have resulted in many pension plans now showing smaller deficits or even a surplus.
“As a result, distressed companies with well-funded pension plans could become more common, providing stakeholders with a greater range of options and solutions when it comes to distressed pension plans.
“Healthy collaboration, open communication channels and an engaged board in times of distress can make a real difference in how deals are done.”