AN MP is “bitterly disappointed” that around 500 former wire factory workers will see their pensions enter a protection fund, despite a four-year campaign to safeguard their defined benefit pension scheme.
Dan Jarvis, the Labour MP for Barnsley Central, wants to know if the Pensions Regulator has enough resources to tackle complex investigations following the partial settlement of the long-running Carrington Wire case.
An £8.5m settlement has been reached with two Russian companies after a probe by the regulator into the Carrington Wire defined benefit pension scheme.
Carrington Wire, based in Elland, West Yorkshire, closed with the loss of more than 80 jobs in 2010. The Russian parent company Severstal said the decision was due to a contraction in the steel wire market. In 2012, the Pensions Regulator issued a warning notice to three potential “targets”, indicating its intention to issue contribution notices in connection with the company’s defined benefit pension scheme. This included two businesses based in Russia - PAO Severstal and OAO Severstal-Metiz. The matter was passed to the regulator’s determinations panel. Shortly before a hearing was due to take place this month, an offer was made by the Russian companies to pay £8.5m. The regulator agreed that, if the sum was paid, it would withdraw its case against the Russian companies.
A hearing in relation to a third party is expected to take place later this year. However, the settlement, and the funds sought from the third party, will not be sufficient to stop the scheme from entering into the Pension Protection Fund (PPF). According to PAN Trustees, the independent trustee of Carrington Wire’s defined benefit pension scheme, the scheme’s deficit in May 2014 was in the region of £27m.
Mr Jarvis said: “I’m pleased we finally appear to be edging towards a conclusion, but I am bitterly disappointed that the settlement will mean the scheme members won’t get more than what they would have got in the Pension Protection Fund. There are still elements of this case which need to be resolved and further questions to be answered about whether the Pension Regulator has the necessary resources to carry out complex investigations in a timely fashion..The campaign continues.”
Alan Hunton, a spokesman for the members of Carrington Wire’s defined benefit pension scheme said members were no better off than they would have been five years ago, and several members had died without receiving their full entitlement.
A PPF spokesman confirmed that members of the scheme will receive compensation.
The spokesman said: “It is encouraging that the Pensions Regulator has been able to recover some of the shortfall in the pension scheme, however the sums are not sufficient to provide everything promised by the scheme; meaning we anticipate taking responsibility for the scheme.”
Members of the defined benefit pension scheme who have not yet retired are expected to receive around 90 per cent of the pension entitlement they had built up before the company went bust, according to a spokesman for the PPF. Members who have already retired have, in general, received 100 per cent of their entitlement, the spokesman added.
A Severstal spokesman said: “Severstal met all of its obligations in relation to the pension scheme while Carrington Wire Limited (CWL) was under its ownership.
“The contested period, which has been under administrative review by the Pensions Regulator in the UK, relates to a period since 2010, when Severstal’s guarantee to meet CWL’s liabilities to the pension scheme expired, following the sale of CWL. Following the conclusion of the enquiry, we have agreed to pay £8.5m towards securing the future pensions of the former Carrington Wire employees.”
“Severstal considers this to be an acceptable conclusion to this matter.”
The Pensions Regulator, which is the regulator of work-based pension schemes in the UK, expects the Carrington Wire defined benefit pension scheme to enter the Pension Protection Fund (PPF) once the case is concluded.
Stephen Soper, the interim chief executive of The Pensions Regulator, said: “I am pleased that our investigation into this complex and long-running case has resulted in a realistic settlement from two businesses based overseas.
“We will not hesitate to use our powers to protect the retirement savings of scheme members and limit calls on the PPF - including cases where the location of the businesses concerned makes recovering funds for the pension scheme more challenging.”