UK workplace pension watchdog The Pensions Regulator (TPR) has given TV broadcasting company ITV six months to provide financial support for the Box Clever pension plan after it lost an eight-year legal battle to avoid having to fund the now-defunct plan.
TPR imposed the deadline after the UK’s Supreme Court last month rejected ITV’s final attempt to challenge the regulator’s decision that the company should pay for the pension plan, which has approximately 2,800 members and a deficit of £115 million ($133 million).
Box Clever was an electronic and appliance rental chain formed in 2000 as a joint venture between the TV rental businesses of Granada, which is now ITV, and Thorn, which is now Carmelite. Respective employees were transferred to the new company and enrolled in the Box Clever pension plan. After Box Clever collapsed in 2003, TPR opened an anti-avoidance investigation and determined that ITV extracted significant value from the joint venture and therefore was responsible for the pension.
In 2011, TPR issued a determination notice explaining why it believed it was reasonable to issue financial support directions (FSD) to ITV and four related entities that formed part of the ITV Group. An FSD requires a company to propose how it will financially support a pension plan. FSDs do not specify the form of financial support that should be put in place. For example, the company can assume responsibility for the employer’s liabilities to the plan, or it can make a lump sum cash payment into it. If TPR considers that the proposal reasonable, it will issue a notice approving the arrangements.
But ITV challenged the FSDs and referred the case to the UK’s Upper Tribunal in early 2012, while also challenging TPR’s ability to submit additional evidence in late 2013. After several years of complex legal challenges by ITV to fight TPR’s use of one of its anti-avoidance powers, the UK’s Supreme Court last month refused ITV’s application for permission to appeal the Court of Appeal’s June 2019 judgment. That judgement upheld a May 2018 decision by the Upper Tribunal that FSDs should be issued to ITV and the related entities in respect of the Box Clever pension.
“In a bid to avoid responsibility for the Box Clever scheme, ITV has used every possible legal channel to fight against our actions to safeguard the retirements of thousands of members,” Erica Carroll, TPR’s director of enforcement, said in a statement. “Now they have exhausted the legal process, we look forward to receiving a credible plan to support the scheme and its members. ITV could have resolved this matter years ago and we hope they will now want to seek a swift resolution.”