Mirror Pension Scheme Abused Again?
The scheme made famous by Robert Maxwell who stole millions from the scheme in the 1980’s has again hit the headlines and unfortunately it doesn’t make for good reading if you are one of Trinity Mirror’s pension scheme members.
The company has agreed with the Pensions Regulator that it will slash its contributions into its final salary scheme in order to us the money that would have gone into its pension scheme to help pay off some of the companies growing debts to American bondholders. Under the agreement the company will now make annual payments of £10m per year to its pension scheme until 2015 when normal payments of £33m per year will resume.
The reduced contributions led to the pension schemes deficit rising sharply from £230m in 2011 to £300m last year. What’s even more worrying is that the deficit is now more than the entire value of Trinity Mirror which is currently valued at £238m. The extent of the strain put on the company by its pension obligations is further highlighted by the fact that the total pension liabilities of Trinity Mirror now stand at a staggering £1.8 billion which is 756% of the company’s entire market value.
Dominic O’Connell, Business Editor for The Sunday Times noted that Trinity is in reality a huge retirement plan that happens to have a small, struggling publishing operation on the side. I firmly believe that this analogy runs true for tens of dozens of the Uk’s ailing final salary schemes.
Many members will now look to the pension Trustees and ask why they didn’t do more in protecting pension members and ensuring that the company didn’t reduce contributions in favour of paying business debts. By the Trustees own admission they were caught “between a rock and a hard place” and faced a delicate balancing act between fighting for the pension members and agreeing to the reduced contributions to help ensure the survival of the company. The Trustees are well aware that should the company collapse the effects on the pension scheme and its members would be devastating.
Whilst Trinity Mirror is certainly in the spotlight it is not the only company who cannot afford to keep up with its pension obligations and many pension schemes are in a far worse state of affairs than Trinity Mirror’s.
Nigel Green deVere Group
Blog written 23rd April