Pension protection fund offers to help firms

The pension protection fund (PPF) is urging food manufacturers that are struggling with its schemes to immediately get in touch with it, because in “cases of extreme hardship”, the PPF can discuss alternative payment options.

The PPF’s concerns come after confectioner Bristow’s of Devon said that one of the main reasons it went into receivership on December 11, was because it was struggling to pay the PPF’s levy. Since then the company has been bought by Andrew Walsh, whose business interests include Millar McCowan, a confectionery manufacturing business based in Scotland, and Thornycroft, a confectionery importing and distribution business based in St Albans.

Administrative receiver and Baker Tilly partner, Andrew Sheridan, said that Bristow’s had “been badly affected by the soaring cost of the pension levy payable to the PPF”

In response to the comments, the PPF said that in most cases it was “highly unlikely that the PPF levy would lead to the collapse of a sponsoring employer”. But it did say that the PPF has taken steps to protect vulnerable schemes by capping the total amount a scheme has to pay to 1% of its liabilities.

“Schemes that are struggling to pay their levy bill should contact us immediately to discuss their circumstances. In cases of extreme hardship one of the measures we can consider is instalment payments,” said a spokeswoman for the PPF.

The Food and Drink Federation (FDF) human resources director, Angela Coleshill, added: “FDF members have for some time had concerns around the uncertainty of levy levels and the calculation of risk.

“In the current economic climate, it is imperative that costs for defined benefit schemes are minimised. We are currently consulting with our members to find out whether they would welcome plans to allow firms to pay their levy in instalments if they are struggling financially.”

Concerns over the levy come after the PPF announced last week that the total pension deficit of Britain’s final salary schemes increased by nearly half in December alone - from £136bn at the end of November to £195bn. Scheme funding is worse than it was a year ago when there was a recorded surplus of £11.7bn in December 2007.