UK - Trustees from Sainsbury's pension fund have quoted estimates that fund deficits could be as high as £3bn, whilst competition hots up for the supermarket giant's imminent sale to private equity investors.
Sainsbury’s had previously estimated its pension fund deficit at £477m using IAS19, which trustees regard as “misleading”. Although the trustees are “agnostic” about the impending takeover, it will be in the interests of the consortium which buys the company to keep the trustees onside.
The trustees have to look at any concrete offers by the consortium and if they are not satisfied can go to the Pensions Regulator. This would slow down the process as negotiations would have to proceed until the regulator and trustees were completely happy.
A spokesperson for Sainsbury’s pension fund trustees said: “The deficit could be as much as £3bn depending on a number of factors. Ultimately it depends on the ability of the company to keep paying for the next 60 years - if there is any hint that that might start to be impaired the deficit starts to get bigger. The pension fund is currently in good health and we want to keep it that way.”
Senior members of the CVC consortium trying to buy Sainsbury’s met with scheme advisors and trustees last week, and it is rumoured that that a second consortium consisting of US buyout funds Bain Capital and Apollo Management is preparing to bid.
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