Mirror pensioners must have thought they had seen it all. But 20 years after Robert Maxwell almost took their nest eggs from them, the trustees of the company’s pension scheme have allowed Trinity Mirror to go back on a promise to make good on the scheme’s huge deficit.
The move has raised the ire of the Pensions Regulator, which has taken the unprecedented step of warning that it may stop Trinity Mirror from slashing its pension scheme contributions by more than two thirds to reduce its debt. The newspaper publisher, which was due to pay £100 million into the scheme over the next three years, has agreed with its trustees to reduce the contribution to £10 million a year. Pensions experts said that the decision puts the interests of bondholders ahead of the group’s pension scheme members at a time when its pension deficit has increased by almost £70 million to £230 million.
The regulator, which was not informed of the move and has the power to force the company to repeal the agreement, issued an unusually sharp statement on the matter.
“We will scrutinise any reduction in contributions or other actions that increase risks to the scheme, and are prepared to take strong action where necessary,” a spokesman said.
John Ralfe, a pensions consultant, said: “It’s extraordinary that the company has made this announcement without agreeing it with the Pensions Regulator. The consequences for the company could be quite serious.”
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The move has resonance for Trinity Mirror pension members: Maxwell, who owned the Mirror Group from 1984 until his death in 1991, plundered the scheme. The company, which publishes the Daily Mirror, has a market value of below £100 million, raising concerns over the size of its pension deficit.
Vijay Vaghela, the finance director, said it had consulted its trustees before opening talks with its lenders and that the company was focused on further reducing its £221 million debt. “This is not a short-term thing and it is in the interests of pension trustees for the company to have a strong balance sheet.” The shares closed down 1¼p at 37p.
Trinity Mirror’s pre-tax profit fell by almost £50 million to £74 million in 2011. Sly Bailey, the chief executive, said it expects to slash a further £15 million in costs this year, on top of the £120 million saved over the past four years.
Ms Bailey was the subject of reports of shareholder unrest over her £1.7 million pay packet, which includes pension payments, in 2010. Sir Ian Gibson, the outgoing chairman, said that the company was reviewing its remuneration policy, with a decision due by Easter that would be voted on by investors.
“It is true that some shareholders expressed concern that the short-term element, particularly in Sly’s case, was too high,” he said, referring to recent meetings with leading investors. However, he added that no discontent had been expressed over her performance.
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• A British car-parts maker has become the first company to offload the risks of a pension scheme that still accrues benefits for members, in a ground-breaking insurance deal with Pension Corporation.
Denso, a Japanese-owned manufacturer, passed two schemes with pension liabilities totalling £200 million to Edi Truell’s pensions buyout business yesterday.
The schemes have been closed to new staff recruits for several years but continue to receive pension contributions from about 2,500 staff. Pension Corporation will assume the risks of interest rate and inflation rises, along with a higher life expectancy among Denso workers, for an annual premium. Until now, only schemes that have been wound up have been able to agree insurance deals. (Miles Costello)