The trustees of the Box Clever Group Pension Scheme made a "perfectly reasonable and right" decision to delay triggering a Pension Protection Fund (PPF) assessment period, the Upper Tribunal has heard.
The tribunal is in the final stages of hearing a case where The Pensions Regulator (TPR) is seeking to enforce a financial support direction (FSD) on five ITV group companies base on their historic ties to the Box Clever 50:50 joint venture with Thorn in the early part of the millennium.
While the trustees were effectively given the power to trigger the assessment period - in being able to demand contributions from insolvent employers - in 2007, this was not used until 2014, a decision which is seized on as an example of poor trustee decision-making.
In closing statements on 8 February, the trustees' barrister Jonathan Hilliard QC said it was the right thing to do to run the scheme on past the Box Clever companies' administrative receivership began in 2003, and then to continue to do so after the introduction of this power.
"It is quite common to seek to control the timing of insolvency and events and therefore linked to that, it is quite common to plan the steps you are going to take quite carefully a scheme into the PPF," he said. "There is no gaming or taking advantage of the PPF in [these] circumstances."
He said it would have been "very, very risky to assume" the PPF would have elongated an assessment period if negotiations were ongoing and therefore to trigger the assessment would "damage your bargaining position" and "cause a problem for the FSD proceedings".
To ignore the PPF would require "some intellectual gymnastics", Hilliard added, arguing the trustees' approach was "perfectly consistent with the policy behind the [Pensions Act 2004]".
He continued: "You plainly have to take into account the PPF when you are discussing what is going to be the effect of the assessment period".
Hilliard noted that there is a spectrum of acceptability where trustees can consider the existence of the lifeboat fund. He cited a 2009 case, Independent Trustee Services v Hope, where the trustees had considering buying out benefits for the highest-paid members to ensure they received vastly above PPF-level benefits. In doing so, no or very few assets would have been transferred to the PPF for the remaining members.
But, responding to the regulator's earlier arguments that the power could apply retrospectively without any special justification, ITV's barrister Lord Pannick QC said TPR was acting beyond what its powers entitled it to.
"Unless the regulator can point to an event, which the regulator can show involves the responsibility of the target which has created a risk that has led to a deficit after that action, which has occurred after the act came into effect, the regulator is acting outside its powers," he said.
And to impose an FSD on ITV now, without it having been able to seek clearance or a comfort letter at the time of the transaction, some five years before the coming into being of TPR, would "frustrate commercial certainty". He also argued allowing such addition of new liabilities for events that occurred before the Pensions Act 2004 came into force would be retrospective and unfair.
Pannick also cited the giving of a comfort letter to Carmelite - the now owners of some of the Thorn businesses related to Box Clever - in 2009 amounted to inconsistent and unfair treatment of ITV.
The regulator had previously told the tribunal, that although different circumstances applied to Carmelite - including the history of the chain of ownership - meaning it felt it had been unable to apply an FSD to the company, its view had changed on the issue by the time ITV had sought a comfort letter and to replicate this error would not be fair on PPF levy-payers.
"It is unfair to Granada to allow the regulator to adopt a different approach than the approach it adopted to Carmelite," said Pannick. "It is not difficult to see the sense of injustice and unfairness that this conduct has caused."
Concluding his part of ITV's closing statement, Pannick cited TPR's beginning assertion, saying: "Despite the considerable efforts [of TPR], the barn door mentioned remains firmly closed to the regulator."
Tim Shepherd and Beth Brown look at the legal implications of working from home and how pension professionals can mitigate the risks.
The Pensions Regulator (TPR) has substantially increased the usage of its powers against trustees – posting a sharp rise in the use of formal information gathering powers and High Court production orders during the three months to the end of September....
The Pension Schemes Bill has completed its third reading, crossing its latest hurdle in the House of Commons.
An amendment to the Pensions Schemes Bill which would have seen people given a pre-booked Pension Wise appointment ahead of accessing their retirement savings has been defeated.
A proposal to ensure savers receive a Pension Wise appointment prior to accessing their retirement pot has received cross-party support in parliament, while Labour seeks net-zero pensions by 2050.