The Pensions Regulator has ordered Sea Containers to inject at least £90m into its two pension funds or face court action.
In a move which pension experts are calling an historic day for UK pension scheme members and their trustees, the regulator has used its powers under the 2004 Pensions Act to issue its first financial support direction to Sea Containers.
The company, which owns train operator GNER, went into Chapter 11 administration last year. This marks the first time the regulator has obtained permission to demand cash on behalf of pension trustees from a company it fears will abandon its pension liabilities.
Sea Containers applied for Chapter 11 protection last October after failing to meet a £58m bond payment. It will cost around £91m to buy pensions for the two schemes’ 1,300 members.
Pension consultant Ros Altmann says: “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 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 we find the regulator has 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.”