Titcomb

It’s been a bad week and a good week for tPR. Lesley Titcomb was clearly fed up with being bashed over the head by Frank Field over Carillion, though Field must be suffering from repetitive strain injuries himself. There is a law of decreasing returns that applies to Workplace Select Committee and I’m inclined to side with tPR when it claims to be learning its lessons.

While Carillion grabbed the headlines, the Pensions Regulator scored a hit (a palpable hit) when the Upper Tribunal (whatever that is) sided with tPR and told ITV to sort out the pension deficit of Box Clever ( a company set up by ITV to manage the rental agreements of Granada and Thorn). The pension scheme still  has  2,800 members and a deficit of c.£115 million.

There were three arguments that ITV were using to slink out of its objections and they were all rejected. TPR were arguing to use a “Financial Services Directive (FSD)” to make sure members get paid their pensions in full.

• Retrospective use – The purpose of the FSD regime is to provide a rescue framework for pension schemes in deficit. TPR could not meet its objectives if it could not take into account events which occurred prior to the Pensions Act 2004 coming into force – for example, many scheme and company structures were created prior to 2004. Box Clever was set up in 2000 – the Tribunal sided with tPR,
• Fault – The regime is not fault based and so does not require criticism or blame to be found against the targets for their conduct in respect of the pension scheme. It is instead a regime based on responsibility – in this case the targets chose the structure of the joint venture and should therefore bear appropriate responsibility for the risks. The Tribunal agreed that it was ITV’s responsibility to pay the pensions – regardless of legal arguments about structures.
• Reasonableness – This is assessed by balancing all the relevant facts to reach a conclusion, with the relationship between the targets and the pension scheme as the starting point. When making this assessment terms from the legislation such as “benefit”, “relationship with the employer” and “involvement with the scheme” should be given a wide interpretation. An FSD may still be issued against a target even if it has not received any substantial benefit from its relationship with the pension scheme’s sponsoring employer, although in this case the Tribunal found that ITV had received valuable benefit from the creation of the employer. I take this to be simplified to “pay up on the promise – the rest is irrelevant.

I am no lawyer, but I can see that this judgement is good news for anyone who has been promised a defined benefit from an employer who is looking to slink away and leave the problem with the PPF. It looks good news for a few cases which pre-date the setting up of the PPF – though I’d be interested to hear from lawyers about how retrospective this judgement could be.

Could extra-time beckon?

Implicit in the title “upper tribunal”, appears a comparative and presumably their is an uppermost tribunal to which all this could be referred to by ITV. TPR mention that ITV have 14 days to appeal. I hope they don’t. It strikes me that we need precedent to stop employers slinking off (using pre-packs and the like). We need tPR to be the winners. We need good news as much as Lesley Titcomb.

I like Titcomb and I like the chair of the Box-Clever trustees, Alan Herbert, who is one of the very best people in pensions. In 13 days time, I hope that they will be able to close the box and that the Pensions Regulator will be able to pop a few clocks – for boxing clever.

the splendid Alan Herbert – Chair of Box Clever’s pension trustees