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Bernard Matthews pension scheme owner 'lined own pockets'

20 April 2017

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The former owners of Bernard Matthews lined their own pockets by rejecting a buyout offer that would have protected the company pension scheme, according to the Work and Pensions Committee.

The committee has published correspondence that shows Rutland Partners rejected the offer in favour of an insolvency process, to make sure they received a greater return.

As a result, members of the scheme are now facing cuts to their retirement income.

Bernard Matthews was sold in September last year and the use of the insolvency procedure meant the company Defined Benefit (DB) scheme, with a deficit estimated at up to £75m, was put into Pension Protection Fund (PPF) assessment.

The letters show that a previous offer to buy Bernard Matthews outright and assume ongoing responsibility for the full liabilities of the scheme, was rejected by Rutland as it would have meant writing off the majority of its outstanding loans to the company it owned.

Bernard Matthews was instead placed into pre-pack administration, a process which placed Rutland Partners ahead of the pension scheme in the hierarchy of creditors.

The arrangement led to an improved financial outcome for Rutland Partners, but drastically reduced the amount recoverable by the pension scheme – to potentially less than 1p in the pound.

A letter from Deloitte confirms that the purchase agreement was not accompanied with any assurances to the pension scheme or the PPF regarding the safeguarding of pension rights.

The pension scheme trustees did not consent to the loss of their secured claim, meaning that an application to the High Court was necessary to force this through.

The PPF is currently assessing the scheme and pursuing a claim for the full section 75 debt due to the scheme, estimated at up to £75 million.

Rt Hon Frank Field MP, chair of the committee said: "I have confidence that the PPF, working with the scheme trustees, will act in the best interests of the pensioners, but it's clear that the former owners passed up a better deal for pension scheme members in favour of lining their own pockets."

First published 20.04.2017

Lindsay.sharman@wilmingtonplc.com