I’m not surprised by news that the PPF has referred the pre-pack of Johnston Press to the Pensions Regulator. While reassuring members that such a referral doesn’t impact their rights to be in the lifeboat, PPF are asking whether the price of a job at the press is that Johnston dumps its pension obligations on everyone else.
The PPF deficit is reported at £80m – which doesn’t represent an existential threat to a fund fast moving to self-sufficiency, it’s the principal (or lack of them) that seems to be in question.
Think about it as a member of staff with a DB pension shortly to be paid out. You leave work on a Friday with a prospective pension of £20,000 and find out when you return to work you’ll now be getting at least a 10% wage cut for the rest of your life. If you value the kind of pension on offer from Johnston press at normal levels , that’s about £70k less on your personal balance-sheet.
Put it another way, you are likely to be working the next couple of years for nothing.
How do the bosses look such staff in the face?
It used to be a “we’re all in this together” kind of thing. The trouble is, those who do the pre-packs aren’t the ones who feel the pain any more. The big winners in pre-packs are the consultants (typically from the big four accountancy firms), followed by the new management (who don’t have skin in the game when it comes to the pension).
The winners don’t lose any of their pension rights and the losers are the staff who were promised a Johnston Press pension and end up getting paid from a lifeboat – an amount rather less than the promise.
Meanwhile the new company praises the deal because it keeps everyone in a job.
How do the new bosses look the old staff in the face? I suspect with difficulty. I suspect that the PPF are asking just such a question of the Pensions Regulator.
BREAKING: The Pension Protection Fund says it has “concerns” over the rescue deal which saw the Johnston Press Pension Scheme hived off to the lifeboat fund at the weekend.
PPF Statement to follow:
— Josephine Cumbo (@JosephineCumbo) November 19, 2018
The thread from Jo Cumbo expands to include the positions of both PPF and tPR. The Trustees and the employer at Johnston Press remain tight lipped.
Not all the members of the pension scheme will suffer the same fate, priority orders mean that those already in receipt of their pension will be less impacted while the longest standing members – who are still to draw their pensions stand to lose the most.
We’ve seen in the past , schemes wriggle out of the clutches of the PPF when those most impacted, get wind of their misfortune and negotiate a Regulatory Apportionment Agreement which allows a new scheme to be set up with limited responsibility from the new company. This is what happened at BHS and British Steel and it tends to be a very expensive way of re-plating the gold.
I very much doubt that the PPF are calling for an RAA in this situation. I hope that they are calling for a proper contribution to the deficit to be made by the company that emerged out of this weekend’s miraculous pre-pack. Because falling into the PPF should not be considered a victimless failure. There are other people involved in the PPF than PPF members, the employers who sponsor other schemes who struggle on and don’t pre-pack, pay levies to keep the PPF in its current state and those levies increase because of failures like Johnston.
The more a sponsor has to pay to keep the PPF solvent, the less it has to pay its staff. So in the end, it’s workers in other companies, including those who work for rivals of Johnston Press who end up footing the pension deficit.
I’ll say it again, how do the bosses of the Johnston press (and their advisers) look us in the face?
A pension-free press?
If the price of the newspapers we buy or the news-websites we subscribe to , includes a premium to keep the pension scheme paying pensions, then it’s a price that I personally am prepared to pay.
I’m afraid I’m in the minority, but the demise of Johnston Press (pt 1) was more than just because of pensions.
I ‘m not too interested in how Culture Secretary Jeremy Wright answered a commons question on the issue – he ducked it and you can watch him duck it here. I’m more interested in comments by the unions and shareholders (as reported in parliamentary business)
The NUJ called for “meaningful guarantees” that the new ownership was committed to journalism and publishing and not simply looking to strip assets from the publisher. This concern was echoed by Custos Group, the biggest holder of Johnston Press shares, whose CEO, Christen Ager-Hanssen, said;
“Today’s pre-pack was not so much a corporate rescue as a blatant pre-planned corporate theft by bondholders, suitably aided and abetted by Johnston Press’ incompetent and double-tongued board”.