We use cookies to support features like login and allow trusted media partners to analyse aggregated site usage.
To dismiss this message and allow cookies to be used, please click "Continue".

Continue

News/Analysis

Twitter board

Follow us
  • My week on Twitter 🎉: 2 Mentions, 3.3K Mention Reach, 5 Likes, 6 Retweets, 7.76K Retweet Reach. See yours with… https://t.co/IZfviidt4H17 hours ago
  • Friday View: Trustees feel the heat over climate change - bankers' pensions back in black - TPR suspends trustee -… https://t.co/kUKa8QUF9w3 days ago
  • Increased regulatory oversight will be risk-based, TPR keyperson will meet schemes deemed riskier several times a y… https://t.co/wUiKPGESaU5 days ago
  • Lesley Titcomb, TPR chief executive says change is on its way, the regulator will increase oversight between valuat… https://t.co/Wu8Pv6TfqS5 days ago
  • Join us and @AonRetirementUK on the 4th of July at the luxurious Victorian Bath House featuring educational presen… https://t.co/r1abr8Qls06 days ago
  • DWP wants trustees to feel the heat over climate change https://t.co/bs25DvyWGF #ESG #climatechange https://t.co/dZEXB0g8a46 days ago
  • My week on Twitter 🎉: 3 New Followers. See yours with https://t.co/mCw3VcMQGw https://t.co/3kEHNr3xyz7 days ago
  • Friday View: Heathrow's ÂŁ325 million buy-in - Auto enrolment for the gig economy - Brunel opts for ACS structure -… https://t.co/vsnML1Vzb510 days ago
  • Pimlico Plumbers- Could gig economy workers be auto enrolled? https://t.co/qgrlWxMUW8 #gigeconomy #autoenrolment… https://t.co/wnDH18iPxG10 days ago
  • RT @eVestment: Workers in the #UK are open to increasing their retirement savings and tend to place greater emphasis on workplace #pensions…11 days ago
  • The June issue of portfolio institutional is now out: Featuring our take on #carillion and lessons for trustees as… https://t.co/yC2PNgoaPr12 days ago
  • RT @PensionsSion: Aon's very own John Belgrove shares his views in this piece. Worth reading... https://t.co/VYEJWjAU3z12 days ago
  • My week on Twitter 🎉: 2 Mentions, 3.29K Mention Reach, 2 Retweets, 3.27K Retweet Reach. See yours with… https://t.co/MeoES7Ch3L14 days ago
  • Friday View: South Yorkshire hedges pension risk- Recruitment execs face prison over pension scam - Johnston Press… https://t.co/9fV8Z48WtF17 days ago
  • RT @cfjescott: A recent piece of mine on the @CMAgovUK investigation into investment consultants in @portfolio_inst #investment https://t.c…19 days ago
  • Our ESG Roundtable: Better Long-term outcomes? Available to download now https://t.co/o7T8kWSwWY https://t.co/oHs4VlRK9E21 days ago
  • Active vs Passive : In 2016 investors withdrew around $285bn from active funds and pumped almost $429bn into passiv… https://t.co/tjpxhTxW5Z21 days ago
  • RT @WhtstheDiehlio: .@AitkenRL spoke with @graniteshares CEO Will Rhind about the ongoing active vs. passive debate. Check out their though…21 days ago
  • Green is the new black. A record sum is expected to be raised under the green bond banner this year, but is it doom… https://t.co/JYP8k0ZfZk23 days ago
  • Our Cover Story! Property: Solid Returns - Low gilt yields are forcing schemes to pile into bricks and mortar. Mark… https://t.co/9nyjFp0Z4R23 days ago

Pensions

PPF weighs in on CVA deals

PPF weighs in on CVA deals

Mona Dohle
Wednesday 13th June 2018

With a growing number of ailing high street chains in the UK considering company voluntary agreements (CVA), the Pension Protection Fund (PPF) has outlined when it would back such deals.

High street retailers in financial difficulty, including House of Fraser, Toys R’ Us Mothercare and fashion chain New Look have recently announced that they are considering CVA deals, an insolvency procedure whereby the company in debt reaches a voluntary agreement with its creditors on the repayment of debt over a set period of time.

While CVA’s can offer an opportunity for firms to restructure their debts and terminate property lease obligations or onerous supplier contracts, with the board and shareholders remaining in control of the company, the agreement has to be signed off by at least 75% of the creditors. In some cases, the pension scheme may be the firm’s biggest creditor.

CVA deals are also subject to approval by the PPF, the lifeboat for UK pension schemes, which will consider how the deal affects the companies’ pension scheme and whether the firm remains viable after closing the CVA deal.

Responding to the recent increase in CVA deals being sought, the PPF stressed again that it would only approve CVA deals if they offered a “significantly better return” to pension scheme members than a company liquidation or going into administration.

The PPF also factors in that the pension scheme should be treated equally and not face disadvantages compared to other creditors.

In line with recent criticisms from the British Property Federation (BPF), which argued that CVA’s were used as a cost-cutting exercise by retailers aiming at rent reductions, the PPF also flagged up that CVAs often only addressed issues around the cost of property, rather than the overall viability of the business.

Another factor to be considered are dividend payments, the PFF outlined that if the firm still paid dividends throughout that period, they should be proportionate to contributions made to its pension scheme.

The lifeboat has recently confirmed CVA deals for Toys R’ US and Mothercare, while proposals by House of Fraser and New Look are being assessed.

As of May 2018, the PPF covered 5,588 schemes with a total of ÂŁ1.611bn in assets and ÂŁ1.705bn in liabilities. Its deficit has increased from ÂŁ81.2bn to ÂŁ94bn month on month, largely due to falling gilt yields, with the funding level currently at 94.5%.

 
0

Leave your comment

View our comments policy

Please login or register with us to leave a comment. It's completely free!

Friday View

Friday View

How investor action helps cut CO2 emissions