Covpress' pension fund avoided transfer into the Pension Protection Fund, London, thanks to the acquisition of its sponsoring employer, an automotive supply firm.
Coventry Presswork Pension and Life Assurance Scheme, Coventry, England, entered the assessment period for the PPF, the U.K.'s lifeboat for the defined benefit plans of insolvent companies, in September, as Covpress entered administration.
However, Covpress was acquired Wednesday by industrial group Liberty House, with the pension fund transferring as part of the sale, a Liberty House news release said.
Based on figures disclosed in Covpress financial statements for the year ended June 30, 2015, executives at Lane Clark & Peacock estimated the value of the pension fund's assets at £22 million ($35 million) and of liabilities at £24 million. LCP advised Liberty House on the deal.
Liberty House has set up a subsidiary company that has bought Covpress and taken on responsibility for the pension fund by becoming principal employer, LCP executives said in an email. A new recovery plan has been agreed with the pension fund's trustees, and the new employer will make deficit contributions over the next few years.
Eddie Williams, a partner at Grant Thornton, the joint administrator for Covpress, added in the news release: “This has avoided the scheme passing into the Pension Protection Fund through an ongoing employer, which we understand has never been previously achieved for a business in administration.”
“The PPF acts as a safety net for scheme members whose sponsoring employer has gone into administration, providing them with compensation for their retirement savings,” said the PPF in a statement provided by a spokeswoman. “In this instance, we were not needed as the purchaser of the Covpress business voluntarily agreed to take on responsibility for the pension scheme. This has achieved a better result for the scheme members and the PPF.”
