Dawson International CFO Slams UK Regulatory Environment
27 July 2012 (PLANSPONSOREurope.com) – The UK’s regulatory environment governing defined benefit schemes lacks “joined up writing”, David Cooper CFO at Dawson International has told PLANSPONSOR Europe.
Last week the luxury cashmere business said unsuccessful talks with the Pension Protection Fund (PPF) and the Pensions Regulator (tPR) over its proposed entry of its UK defined benefit plans into the PPF could lead to the firm calling in the administrators.
Cooper told PLANSPONSOR Europe: “As an employer I don’t think we are done any favours by the reporting environment. There are so many measures of the deficit and it is a deficit that clearly is very long term but can be crystallised in certain circumstances by the Pensions Regulator or by the Trustees. It is a deficit that fluctuates widely from time to time. We are frustrated with the regulatory system that has put us in this position of having a deficit crystallised.
“This is a much wider issue than just a Dawson issue. The issue for me is there seems to be no joined up writing in all of this. The outcome that we seem to be faced with is not good for the company or potentially for the employees or for the shareholders and it is not good for the PPF. It seems like everybody loses in this situation but the regulatory environment is such that this is allowed to happen and we are allowed to slip through the cracks and the decision seems to make no sense.”
Cooper adds in the worst case scenario the company could be pushed into administration. “I am absolutely sure some other plan sponsors will be in danger. Our circumstances were maybe more extreme because of the way that our business has shrunk over the past 10 years and there have been some major issues. We have got more than 3,200 members of the pension scheme but we got 200 employees and 54 active members of the pension scheme so we are now a relatively tiny company supporting a massive pension scheme and if that pension scheme goes into deficit there is no way a company of our size can hope to make good that deficit.
“What is really disappointing is there is a situation here that everyone can see and understand. Everybody recognises the problem but nobody tries to fix it. There is no body out there that says we recognise that the company cannot fund this size of deficit, the PPF is on the other side saying because the notional buy-out deficit is so huge we’re not going to do a deal with you because anything you offer is not sufficient in terms of that buy-out deficit but there is nobody coming along and saying we accept all that but how do we fix this in a way that’s best for everybody involved – the company, the shareholders, the employees, the PPF and the taxpayer because if the company fails the scheme goes into the PPF in any case and the tax payer is worse off.”