Firm forced to pay into pension pot
The parent company of a textile firm that was put into administration before being bought back on the cheap must stump up £5 million for its pension scheme, the Pensions Regulator has ruled.
The watchdog is forcing Michel Van De Wiele (VDW), the owner of Gateshead-based textile machinery firm Bonas, to pay the funds into the Bonas' pension scheme, which had to be bailed out by the Pension Protection Fund.
It said VDW retained the Bonas business by putting the firm into a pre-pack administration and then buying it back free of its debts. It claims this was a bid to avoid its pensions liability.
It is the first time the regulator has issued a Contribution Notice determination as cases are normally settled without the need for formal enforcement action.
The Pensions Regulator said VDW had not engaged openly with pension trustees or the regulator, although VDW has appealed against the decision.
Bill Galvin, the regulator's acting chief executive, said: "Much of the regulator's effort to secure funding to schemes occurs through a process of discussion and negotiation, working with trustees and pension scheme sponsors.
"But where attempts are made to avoid companies' pension obligations we will use our 'moral hazard' powers to protect members' benefits and the Pension Protection Fund."
The regulator previously used its anti-avoidance powers in 2007 when it issued a financial support direction against Sea Containers calling on the firm to provide long-term support for its pension scheme.
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