Watchdog bites at Sea Containers

By LUCY FARNDON
Updated:

 

The Pensions Regulator is trying to shed its 'toothless tiger' image and get tough on companies who don't pay their pensions.

The watchdog has decided to go after Bermuda-based Sea Containers Ltd, in an attempt to secure pensions for 1,376 former and current workers at its UK subsidiary, Sea Containers Services Ltd.

It is issuing its first ever Financial Support Direction, which calls on the SCL parent company to provide financial support for the two final salary retirement funds.

This suggests it will be using its legal powers, if necessary, to force Sea Containers to honour the £91m deficit within its two UK schemes.

This is the first FSD issued since the Pensions Act of 2004 gave the regulator the powers. An FSD is issued if the regulator believes a company is trying to avoid paying its pension.

Other notices could follow soon, since the watchdog is looking into the pensions situation at a number of other companies.

The actions against Sea Containers come as the regulator faces criticism that it should have intervened at Boots, where directors are accused of selling out to private equity giant KKR without safeguarding the interests of pensioners.

In the case of Sea Containers, both the parent company and its British subsidiary have filed for chapter 11 bankruptcy protection in the US.

Tony Hobman, chief executive of The Pensions Regulator, said: 'Our anti-avoidance powers are significant and, as we have always stressed, we will use them proportionately and where reasonable.'

Chasing a firm which is based in Bermuda demonstrates that Hobman is not afraid of reaching to foreign shores to ensure firms don't shirk their pension responsibilities.

Nicholas Couldrey at solicitors Sacker & Partners, which is acting for one of the Sea Containers schemes, said: 'This adds significant credibility to the regulator and demonstrates it is prepared to take strong action to protect members' benefits.'

Sea Containers said it was ' disappointed' at the outcome of the hearing, adding that it takes the pension liabilities 'very seriously'.

It said it had always expected that any financial restructuring plan would require the backing of the regulator.

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