Anna Rogers: We are pleased to have established that this is an option for schemes with the right fact pattern
The Pensions Regulator (TPR) has granted a modification order enabling trapped surplus to be paid back to a sponsor.
The trustee of the Littlewoods Pension Scheme obtained the order under Section 69 of the 1995 Pensions Act enabling remaining surplus at the end of wind up to be paid back to the sponsor, which would have otherwise been trapped with the scheme.
The scheme, which dates back to 1947, had around 10,000 members in 2023 and has been closed to new members since 2001 but will continue to pay benefits for the next 50 years.
It previously had a deficit of around £400m during the early 2000s, but this was overcome with employer contributions, enabling the transfer of liabilities via two buy-ins worth around £1.7bn.
The sponsor paid an additional £32.5m in total above its legal obligations, and around £16m worth of assets are expected to remain in the scheme after all benefits are secured and buyout costs have been paid.
The trustee will now notify former members over a six-month process, enabling the surplus refund to be repaid, after TPR made an order authorising the trustee to modify rules allowing the surplus to be returned.
Legal advice was provided by Arc Pensions Law.
Arc senior partner Anna Rogers said: "We are pleased to have established that this is an option for schemes with the right fact pattern. It's been a slow process, and TPR's requirements are stringent, but the precedent will be helpful to other older schemes with a surplus that is trapped even on winding-up."
Littlewoods Pension Scheme trustee chairman Colin Thwaite said: "Littlewoods has provided generous financial support to our scheme over recent years, and I'm delighted that we have been able to secure the pensions for all our members in full. We are grateful to TPR for enabling us to pay the unused assets back to the sponsor so that we can now finish winding the scheme up. Guaranteeing our pension obligations has been our goal for a long time and it is a testament to the quality of our advisers, and the longstanding support and collaboration with sponsor and its shareholders, that we have achieved it."
