Govt writes off £483,000 as Aon completes Maxwell scheme wind-up

The Maxwell schemes are those defrauded by Robert Maxwell, former owner of the Mirror, in the years leading up to his disappearance and death in 1991. 

It was revealed in December of that year that he had stolen around £450mn from the pension funds of Mirror Group Newspapers, Maxwell Communications Corporation and AGB, a scandal that led to the Goode Report in 1993, and then the Pensions Act of 1995, designed in part to ensure such an event could never happen again.

The AGB Pension Scheme was established in the mid-1980s for the employees of two small businesses purchased by Maxwell. A later management buyout saw a new scheme created, the VWE Pension Scheme, and employees from the two small businesses transferred out of the AGB scheme — some to VWE, and some to other schemes.

The VWE scheme was due to receive a bulk transfer from AGB, but delays in establishing the amounts due meant that VWE had still not received the money when the businesses collapsed and AGB went into wind-up. The VWE scheme then ran out of funds in 1992 and its members were left entirely reliant on emergency cash from the government.

Settlement reached in 1995

The broader Maxwell scandal led to a number of government hearings, the formation of a number of pressure groups composed of pensioners and scheme members, and significant public pressure to support those whose savings had been stolen.

The government was reluctant to compensate members directly, with then-secretary of state Peter Lilley arguing that the taxpayer should not foot the bill for misappropriated funds, preferring to make them a debt on the employer company.

It did, however, form the Maxwell Pensions Unit and the Maxwell Pensioners Trust, the former being designed to co-ordinate the return of assets. A total of £2.5mn in emergency funding was set aside to keep pensions in payment in the short term.

As the scale of the scandal became known, it became impossible to determine from company records who owed what, and even which members properly belonged to each scheme.

The Maxwell Pensioners Trust was tasked with securing private sector donations to fund schemes in deficit, and money was transferred via repayable loan agreements so that schemes could return the borrowed money as they recovered their assets.

In March 1995, a settlement was eventually reached that provided for around £276mn to be provided to the affected schemes, safeguarding the pension rights of the majority of members.

DWP agrees to write off grant

Several decades later, it was revealed in the Department for Work and Pensions’ annual report and accounts, published on July 7, that Aon Pension Trustees was in the process of winding up the AGB Pension Scheme.

The report details that the trustees sought clarification on what was owed to the central government in respect of the grant given to the scheme.

The trustees informed the DWP that the scheme was unable to meet the full cost of the grant, worth £811,244, and the government agreed to write off £483,294.

Aon Pension Trustees director Ian Herbert told Pensions Expert: “Members of AGB Pension Scheme have received their benefits in full, which have been secured by individual polices with Prudential and Legal & General. 

“As part of the wind-up of AGBPS, the trustee also repaid in full the deferred state pension premiums to the DWP.”

The terms of the grant meant that repayment would only be required if funds remained after securing members’ benefits, and after paying deferred state premiums, with the government agreeing to receive £327,950, Herbert explained.

The question of state premiums had been a sticking point during negotiations in 1992, but part of the eventual agreement included a pledge by the government to defer collecting these from Maxwell schemes whose members had contracted back into the Second State Pension, and that were not able to pay member benefits.

“I am pleased to confirm the successful resolution for this last scheme supported by Aon Pension Trustees,” he said.