Independent Trustee Services Limited (ITS), on behalf of the First Quench Pension Fund, has agreed to a £160m buy-in deal with Pension Insurance Corporation (PIC).
The buy-in follows a negotiated settlement between the joint administrators of First Quench Retailing Limited (FQRL) and the trustee in relation to certain funds held in escrow.
As a result of the settlement, the trustee has been able to secure a buy-in policy with PIC, which guarantees members' benefits at least equal to 100% of the Pension Protection Fund (PPF) compensation.
Once the final data and benefit work has been completed, it is expected that members will receive compensation above the PPF level.
Chris Martin, ITS managing director, said: "We are delighted to have completed our settlement discussions and to have achieved what we believe will be a very positive outcome for members.
"Whilst members will not receive their full Fund benefits, the outcome should mean that overall the Fund can pay materially more than PPF compensation. ITS and its co-trustees have worked closely with their advisers, plus the Joint Administrators, PIC and the PPF to deliver a successful outcome to a very complex situation."
Joint administrator Richard Fleming of KPMG said: "This is a pragmatic and fair outcome which allowed creditors of FQRL to achieve a significant return which may otherwise have been eroded in extensive and costly legal disputes between parties."
FQRL entered administration in October 2009 and the scheme, which has 1,966 members, has been in PPF assessment since that time.
LCP partner Charlie Finch, who advised the trustee on the insurance process, said that there was additional complexity to the deal because of the interaction between the buy-in and the settlement of the escrow account.
David Collinson, PIC co-head of business origination, said: "We are proud to have been able to help the Trustee secure members' benefits for the long-term and bring stability after what must have been a concerning time for the members.
"I am also delighted we will be able to provide an uplift in members' benefits over and above what they would have received in the PPF. This has been a complex process and both ITS and LCP have been instrumental in helping achieve the best result for members."
Earlier in the week PIC secured a £63m buy-in with the National Society for the Prevention of Cruelty to Children (NSPCC) Pension Scheme.
First published 22.05.2013
monique_simpson@wilmington.co.uk
