Former employees of car manufacturer MG Rover have avoided a cap on their pension entitlements after The Pensions Regulator reached a settlement with Capital.
The firm went bust in 2005 and its defined benefit scheme went into an assessment period with the Pension Protection Fund, the lifeboat fund for DB schemes.
However, TPR says it now expects the scheme to wind-up outside the PPF after Capital – a firm set up in 2001 to acquire a portfolio of vehicle finance agreements from MG Rover – agreed to pay the scheme just over £8m. If a scheme falls into the PPF members’ benefits are capped.
TPR interim chief executive Stephen Soper says: “I am very pleased with the £8m settlement which is substantial in this context and an excellent outcome for the scheme.
“Our involvement once again demonstrates that the regulator will not hesitate to use its powers to protect the retirement savings of scheme members and limit calls on the PPF.
“It is clear that our warning notice led to productive negotiations with Capital, concluding in a settlement which achieves our joint objectives to act in the best interests of scheme members and the PPF.”
In 2012, the regulator signalled its intent to issue a financial support directive to Capital on the premise that the acquisition of the portfolio could have better benefited MG Rover.
As a result of the settlement, the regulator will not be imposing the directive, which would have given Capital a responsibility to support the DB scheme.