An £8.5m settlement has been reached with two Russian companies following an investigation into a pension scheme at a Yorkshire-based company.
The deal has been concluded after a probe by the Pensions 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. At the time, the Russian parent company Severstal said the decision was due to a contraction in the steel wire market.
In November 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. Following representations made by various parties, including the Russian companies, the matter was passed to the regulator’s determinations panel. A hearing was scheduled to take place in January this year. Shortly before the hearing, an offer was made by the Russian companies to pay the sum of £8.5m. The regulator agreed that, if that sum was paid, it would withdraw its case against the Russian companies.
In a statement, The Pensions Regulator said: “The funds have subsequently been paid to the scheme and, accordingly, the regulator is no longer seeking contribution notices in relation to the Russian companies and this brought an end to the proceedings against them. A hearing in relation to the third target is expected to take place later this year.”
However, the Pensions Regulator confirmed that 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). Stephen Soper, 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.”
A Severstal spokesman said: “Severstal met all of its obligations in relation to the pension scheme whilst 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.”