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Pensions regulator reaches £74m settlement over DB scheme liabilities

Pensions regulator says new deal will safeguard scheme with £85m ongoing deficit

Coins-Money-Currency-Calculator-Finance-Business-700.jpgThe Pensions Regulator has secured a further £74m from thread manufacturer Coats Group as it reaches a final settlement with the firm over fears it was ducking its defined benefit scheme funding responsibilities.

In December last year, Coats paid £255m into two of its pension schemes, the Coats Pension Plan and the Brunel Holdings Pension Scheme, after discussions TPR.

However, an estimated £85m ongoing deficit still remained in a third of its schemes, the Staveley Industries Retirement Benefits Scheme.

The settlement over this scheme includes a £74m up-front payment, but also a full buy-out guarantee from Coats covering the liabilities of the Staveley scheme.

TPR has agreed to halt its regulatory action. The deal dates back to 2013, when TPR issued its first warning notices against Coats threatening to use its powers to direct financial support.

TPR executive director for frontline regulation Nicola Parish says: “The use of our powers in this case has led to an extremely positive outcome for pension savers and the group.

“The ongoing trading operations of Coats have improved and are sufficient to provide ongoing funding for the schemes. This is an excellent result for scheme members, bringing greater certainty that future benefits will be paid in full.

“We will not hesitate to use our financial support direction powers where we see member benefits put at risk, even where the sponsoring employer is solvent.”

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