Uniq plan rejected

20 July, 2010

The Pensions Regulator has turned down proposals by food company Uniq to fund its £436m pension scheme deficit.

Details of the proposal, agreed by the firm and the scheme’s trustees, included linking pension fund contributions to the company’s ability to pay and reducing the percentage share of company earnings payable to the scheme. It also proposed changes to the scheme’s asset allocation, by reducing the percentage of its investments in equities.

In a statement, Uniq announced that the Pensions Regulator stated the food company’s plan “does not meet all of its criteria for clearance”. It said that the company and its trustees would work to find a resolution for the scheme, but that it “anticipates it will take some time to resolve”.

Jonathon Land, pensions credit advisory partner at PwC said: “Many people were watching with interest to see if Uniq’s funding deal would be cleared by the Pensions Regulator and were possibly planning similar transactions if it had been”.

Land said that in this rejection, the Regulator has demonstrated that it will “take a hard line where it believes a deal is not in the best interests of pension scheme members.” He said that it could set an “unwelcome precedent” for other schemes considering a similar route.

The Pensions Regulator did not stipulate which parts of Uniq’s proposal failed to meet its criteria. Land added: “In our experience deals that have had Regulator involvement right through the process instead of just at the final stages are more likely to get a better outcome.”