£8.5m settlement reached in Carrington Wire case
Wednesday 28 January 2015
An £8.5 million settlement has been reached with two Russian companies following an investigation into the Carrington Wire Defined Benefit Pension Scheme by The Pensions Regulator.
In November 2012, the regulator issued a warning notice to three potential ‘targets’, indicating its intention to issue contribution notices in connection with the scheme.
This included two businesses domiciled in Russia - PAO Severstal and OAO Severstal-Metiz.
Following representations made by the various directly affected parties, including the Russian companies, the matter was passed to the regulator’s Determinations Panel in June 2014. An oral hearing was scheduled to take place in January this year.
Shortly before the hearing was due to take place, an offer was made by the Russian companies to pay the sum of £8.5 million to the scheme. The regulator agreed that if that sum was paid, it would withdraw its case against the Russian companies.
The funds have subsequently been paid to the scheme and, accordingly, the regulator is no longer seeking contribution notices in relation to the Russian companies and this brought an end to the proceedings against them.
A hearing in relation to the third target is expected to take place later this year.
The settlement sum and the funds sought from the third target will not be sufficient to allow the scheme to avoid entry into the Pension Protection Fund (PPF). The regulator expects the scheme to complete its assessment period and enter the PPF once the case is concluded.
Stephen Soper, interim chief executive of The Pensions Regulator, said:
“I am pleased that our investigation into this complex and long-running case has resulted in a realistic settlement from two businesses based overseas.
“We will not hesitate to use our powers to protect the retirement savings of scheme members and limit calls on the PPF - including cases where the location of the businesses concerned makes recovering funds for the pension scheme more challenging.”
A report on the case will be published under section 89 of the Pensions Act 2004, when the case has been concluded.
- A Contribution Notice (CN) requires a specified amount of money to be paid into a pension scheme by an individual or a company. As detailed in the Pensions Act 2004, a CN can be issued where the person was a party to an act or deliberate failure to act which was either materially detrimental or which had a main purpose of preventing the recovery of or reducing the amount of a section 75 debt.
- The Pensions Regulator is the regulator of work-based pension schemes in the UK. We have objectives to: protect members’ benefits; reduce the risk of calls on the Pension Protection Fund (PPF); to promote, and to improve understanding of the good administration of work-based pension schemes; to maximise employer compliance with automatic enrolment duties; and to minimise any adverse impact on the employer’s plans for sustainable growth (in relation to the exercise of the regulator’s functions under Part 3 of the Pensions Act 2004 only).
Matt Adams 01273 662086