Pension Protection Fund steps in to shield H&W scheme from £85m debt

A DEFICIT of £85m in the pension scheme of shipyard Harland & Wolff in east Belfast is now being monitored by a public body which will make payments to staff.

H&W was sold to Infrastrata plc after it went into administration, rescuing the 79 jobs.

The administration process wiped out liability for the pension fund of the company, which is to provide for the livelihood of former workers.

However, the Pension Protection Fund (PPF) now has assumed responsibility for the scheme.

The latest report from the administrators of Harland & Wolff Group plc said there was a liability of £85m in the fund, making it the company’s biggest creditor. The fund has 2,633 pensioner and deferred members.

At its peak in the Second World War, H&W had around 35,000 staff.

The PPF said it had initiated the transfer of the scheme and that members could be assured of the fund’s protection.

It added it expected it will take between 18 and 24 months to assess the scheme.

A spokeswoman said: “The PPF exists to protect members of UK defined-benefit pensions when their employer fails and their scheme is unable to pay them what they were promised.

“If we didn’t exist, members who had built up their valuable pension benefits would simply receive a share of what was left in their scheme when their company failed and in most cases would be substantially less than what the PPF provides.

“The PPF currently protects more than 250,000 people whose employers have failed and members of the H&W scheme can be reassured of our protection.”

A total of £88.5m was owed by Harland & Wolff Group plc, with H&W’s former parent company Dolphin Drilling ASA in Norway the only other creditor.

H&W was first put up for sale by its parent company last year.

Newry firm MJM Group was lined up by advisers BDO as a potential buyer. However, the talks over a purchase deal ultimately fell through.

When its parent company went bankrupt, H&W no longer had a source of financing, which eventually led to it entering administration.

Further offers emerged following the administration, eventually leading to the successful offer from InfraStrata plc to take over the business.

Denise Walker, senior organiser at trade union GMB, which represents many of the H&W workers, said: “The pension liability transferred to the PPF when the company went into administration in August.”

“The pension scheme had closed prior to the closure (of the company) and all existing and future pensioners will receive pensions according to the rules of the PPF and the legislation surrounding the fund.”

Other schemes which have entered the PPF include MG Rover, Readers Digest and Woolworths Group Pension Scheme.

One of the biggest names to enter the PPF was the Kodak Pension Plan number 2, with a £1.5bn deficit.

Members of the scheme who are over the pension age, or who receive a spouse’s, dependant’s or ill-health pension, get 100%.

If a member is an early retiree or below the normal pension age of the scheme, they will receive 90% of what they were promised.

However, that amount is capped at £36,018 per year — a level set by the Department of Work and Pensions. Everyone in the scheme receives at least 50% of their old-age pensions.