One piece of pensions news that caught our eye last week (on the same day as the Court of Appeal Judgment in Virgin Media arrived) was the press release from The Pensions Regulator announcing that it has agreed a proposed deal with ITV over the long running Box Clever pension scheme anti-avoidance case. 

The investigation into the Box Clever pension scheme has been long running. TPR issued a determination notice (saying why it was reasonable to issue FSDs to companies in the ITV Group) in 2011. More recently, in 2019, the Court of Appeal upheld a decision of the Upper Tax Tribunal, affirming the jurisdiction of TPR to issue a Financial Support Direction (FSD) to target companies in the Box Clever anti-avoidance case, and that it was reasonable for TPR to issue FSDs. When agreement could not be reached, TPR issued further proceedings seeking a Contribution Notice (CN) from ITV  for the Scheme’s full buy-out deficit.

What is an FSD?

TPR has the power to issue an FSD (where it is reasonable to do so and where other threshold and statutory tests are met) to a target. The FSD requires the target to put in place financial support for a defined benefit pension scheme. An FSD can create a legal link between the target and the scheme where there may not have been one before and can be issued if TPR considers a scheme's employer to be either a 'service company' or 'insufficiently resourced' at the relevant time.

What is a Contribution Notice?

TPR has the power to issue a CN (where it is reasonable to do so and where other threshold and statutory tests are met) to a target. The CN requires the target to contribute towards a defined benefit pension scheme. The CN in the Box Clever case was for around £76million. 

What is the proposed deal?

Last week, TPR issued a press release announcing that all members of the Box Clever pension scheme are set to receive their full pension benefits following an agreement in principle between TPR and ITV. Subject to a (potentially year-long) data cleansing exercise and to the deal ultimately going ahead (ITV has certain termination rights), the agreement would see 2,800 members transferred to ITV's pension scheme, ensuring full benefits and back payments.  

This agreement is good news for the Box Clever scheme members, some of whom have been receiving benefits at Pension Protection Fund (PPF) level since 2014.  It is also good news for TPR given the investment in this matter for well over a decade. The case shows TPR’s willingness to pursue matters robustly to protect pension savers and we await TPR’s regulatory intervention report with interest to see the relevant factors that led to a settlement being reached now (subject to the transfer being made). 

Burges Salmon regularly advises trustees and employers on regulatory compliance to help our clients understand their obligations. These are particularly relevant in the context of corporate transactions (which we are seeing increasing again) and distress scenarios. If you would like to discuss TPR’s powers in the context of your defined benefit pension scheme, please contact Chris Brown or Clive Pugh.

This article was co-authored by Chris Brown  (Pensions Partner) and Ben Jonsmyth (Trainee Solicitor)