Suffolk brewer wants to be able to revisit “over-generous” pensions
- Credit: Archant
The finance boss of East Anglian brewer Adnams has urged MPs to consider if 'over-generous' pension promises which could bring companies to their knees could be watered down or reversed.
In the wake of the collapse of BHS and the sale of Bernard Matthews, Stephen Pugh of the Southwold-based brewery said his company remains well-founded financially, but warned MPs that legacy pension agreements were proving very expensive for companies amid sustained low interest rates.
He will appeared before the Work and Pensions Select Committee as part of its pensions inquiry following the collapse of BHS, which went into administration with a reported £600m pension scheme deficit. The sale of troubled East Anglia-based turkey firm Bernard Matthews to food tycoon Ranjit Boparan, which left its near-£20m pension scheme deficit to be shouldered by the pensions lifeboat, the Pension Protection Fund (PPF), is also being looked at as part of the probe.
Andrew McTear, of the insolvency firm McTear, Williams & Wood, said final salary pension schemes were a 'ticking time bomb', particularly for medium and smaller-sized businesses, whose schemes have disproportionately large running costs.
But he questioned if politicians would be able to rule that people who had worked all their lives should not be paid if a company was able to pay.
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In written evidence to the select committee ahead of today's appearance, Mr Pugh said the EDP/EADT Top100 company and pension trustees agreed a minimum 4% annual increase in the past with 'no conception' of today's circumstances.
'Clearly this rate of increase is exceptional in today's low interest rate environment, and has meant that pensioners have enjoyed increases substantially in excess of those given to staff in recent years.
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'This promise is proving very expensive to the company, though fortunately Adnams remains well founded financially,' he said.
'I appreciate that the legal position will be that 'a promise is a promise', but when the promise is to be fulfilled by others many years after it is made, when it may have been made in ignorance (or in the worst circumstances it might be self-serving), and when it causes injustice between groups, is there really no point at which it can be reversed or ameliorated short of the position where it becomes impossible to fulfil as it is bringing the company to its knees?' he asked.
'If there is indeed no such recourse I would ask the committee to consider the case for providing that some types of over-generous promises can be revisited.'