Cosalt pension scheme is to be wound up
TRUSTEES of the Cosalt Plc Retirement Benefits Scheme have confirmed it is to be wound up, with an application to be made for it to be admitted to the Pension Protection Fund.
The 140-year-old firm, which called the administrators in on Friday, has been unable to make payments into the scheme for the past two years, having been unable to agree new contributions following a sanctioned holiday period.
In 2011, the deficit stood at £9 million, although it is understood to have ballooned since.
About 100 people are in receipt of a Cosalt pension in the Grimsby area, either as former employees or dependents.
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Payments will continue while the application is assessed by the statutory corporation, a process which should be completed within two years.
The winding up procedure was triggered as Cosalt Plc went into administration, as there is no longer an employer able to support the scheme.
Chairman of the trustees Rodger McCracken said: "The trustees have given the company every chance during the past few years to resolve its financial difficulties in order that the company could resume its responsibilities to the scheme's members. Unfortunately the company's finances have continued to deteriorate and the company has been unable to pay the agreed contributions into the scheme. Our solicitors have advised that as trustees we have a duty to protect the scheme's assets for the benefit of all members and that we can best do that by a winding up followed by an application for the admission of the scheme to the Pension Protection Fund.
"We have taken this step with great reluctance and sadness, but in view of the financial position of the company and the professional advice we have received, we had no alternative."
In a trading statement released earlier this month, Cosalt Plc revealed that annual payments to the order of £2.1 million might be required over a 28-year period to meet the scheme requirements.
For the time being, payments to the majority of scheme members will continue to be made by the trustees at the present rates – although different rules may apply to members retiring early and to those who have not yet retired, with a general 90 per cent receipt rule.
An annual increase normally awarded in April will not be paid, and it is likely that the next increase will not be until January 2014 – and will then be at such rate as the Pension Protection Fund may award. Not all benefits may be carried across.
The flag to the Pension Protection Fund was in the form of a Section 120 notice. It will now work with trustees to obtain the necessary information to determine if the scheme is eligible to pass into the PPF or not.
The notice will then be validated, and the assessment period will begin.
For more information, visit www.pensionprotectionfund.org.uk