Retailer escapes regulatory intervention with ‘proactive’ action on PPF-bound scheme

Purepay paid £7m into The Edinburgh Woollen Mill Ltd Retirement Benefits Scheme to boost its funding level and remove the risk of members getting less than their full expected pensions.

The Pensions Regulator (TPR) said it had worked with the employer and that Purepay’s “proactive” approach had meant the regulator did not need to intervene or exercise its “anti-avoidance” powers.

The Edinburgh Woollen Mill’s parent was hit hard by the effects of the Covid-19 lockdown and entered administration in November 2020. It was subsequently bought out of administration, and a deal to bring the pension scheme out of the PPF’s assessment period was completed in December last year.

Gaucho Rasmussen, executive director of regulatory compliance at TPR, said: “Strong collaboration with the PPF and pension trustees and active dialogue with the new owner were decisive factors in achieving this rescue package. Members’ pensions are now more secure thanks to a new statutory employer, which has made a £7m lump sum payment into the scheme and agreed a recovery plan to help the scheme become fully funded in the next few years.”

TPR had opened an enquiry into the circumstances of the pension scheme after the insolvency and issued several formal requests for information. In a report into the case, published today, the regulator said by mid-2021 it was considering a formal intervention.

However, Purepay’s engagement with the regulator and trustees meant such action was not necessary. As well as a £7m cash injection into the scheme, it has also agreed a three-year recovery plan with the trustees.

“Transparency between sponsoring employers and trustees is vital, especially when employers are facing financial difficulties,” Rasmussen said. “TPR won’t hesitate to take regulatory action when necessary, but we welcome early dialogue with trustees and employers to resolve situations without needing to formally engage our anti-avoidance powers.”