Media wholesaler Smiths News is facing potential regulatory action relating to a defined benefit (DB) scheme attached to a former subsidiary that went bust in 2023.
The Pensions Regulator (TPR) issued a warning notice to the listed logistics company last week, Smiths News revealed in a notice to the stock exchange on Monday morning (23 February).
Alongside Smiths News, several other connected parties have received warning notices in relation to the Tuffnells Parcels Express Pension Scheme. The scheme is currently in the Pension Protection Fund’s assessment period after its sponsoring employer, Tuffnells Parcels Express, went into administration in 2023.
A TPR spokesperson said: “We can confirm that we have carried out an investigation into the Tuffnells Parcels Express Pension Scheme, and have subsequently issued a warning notice setting out how we are seeking to use our powers to resolve this matter.”
TPR is seeking to recoup the value of the scheme’s section 75 debt, which it estimates at just under £3.5m, according to Smiths News’ statement.
In its latest annual report, Smiths News disclosed costs of £0.7m connected to professional advice it sought in relation to the case. However, it has not set aside any money to pay any future bills.
In its stock exchange announcement, the company said it was “too early” to know whether the regulator would indeed issue a Financial Support Direction, which would require Smiths News to pay a share of the section 75 debt.
It added: “The board maintains the view that Smiths News acted reasonably throughout its time as parent of Tuffnells and that it was an overall net contributor of funding to Tuffnells during its period of ownership.”
Smiths News owned Tuffnells Parcels Express between December 2014 and May 2020. It was sold to a special-purpose vehicle in 2020.
Despite some uptick in activity post sale, Tuffnells went into administration on 12 June 2023. The pension scheme entered PPF assessment on 29 July 2023.
As of 31 December 2021, according to Tuffnells Parcels’ last available report and accounts, the pension scheme had £11.7m in assets and liabilities worth £12.7m, representing a shortfall of just under £1m and a funding level of 92.5% on an accounting basis. The section 75 debt is calculated on a buyout basis.
