The Pensions Regulator has ordered Sea Containers to inject at least £90m into its pensions funds or face court action in a landmark move.
The regulator has used it powers under the 2004 Pensions Act to issue its first financial support direction to Sea Containers in a move which pensions experts are calling an historic day for UK pension scheme members and their trustees.
Sea Containers which owns the train company GNER went into Chapter 11 administration last year and this marks the first time that the watchdog has obtained permission to demand cash on behalf of pension trustees from a company that it fears will abandon its retirement liabilities.
Pensions consultant Ros Altmann says: “For too long, many companies viewed their UK final salary pension liabilities as ‘optional’ and have not taken their pension promises seriously enough. In the past, parent companies engineered ‘insolvency’ events to get rid of pension liabilities if they did not want to meet the full costs of providing the pensions their staff were expecting.
“Effectively reneging on pension promises was legal, but was morally indefensible. Thousands of people’s lives have been shattered by the loss of the pension they were relying on.
“This will be a really important test case for the Regulator’s new powers. None of them have been tested yet and I certainly hope that we will find the Regulator will have real teeth, so that members and trustees can know the law really will try to force employers to honour their pension promises, rather than leaving members’ pensions at risk.”