Reward Strategy. Incoporating Payroll World.

Southern Water to pay £50m more into pension scheme

Southern Water will pay more money into its pension scheme, following an investigation by The Pensions Regulator (TPR).

TwitterLinkedInFacebook
Initial payments will be up to twice as much as before
Initial payments will be up to twice as much as before

TPR took action over what it felt was an imbalance between the funds contributed to the company’s pension scheme and the level of dividends paid to shareholders in 2016 and 2017.

 

Southern Water will now pay £50m more money into the scheme over a shorter recovery plan period. TPR said initial payments will be up to twice as much as before, with every subsequent payment also higher.

 

The watchdog said a dividend sharing mechanism will ensure future dividend payments do not lead to unfair treatment of the scheme.

 

As of March 31 2016, the date of Southern Water’s last triennial valuation, the scheme had an ongoing deficit of £252m. TPR said the company could have afforded to pay off the deficit far sooner, especially given the £190m it paid in dividends in 2016 and 2017. TPR considered this amounted to unfair treatment of the scheme.

 

Therefore, TPR began regulatory proceedings and issued a warning notice to the trustee and company. The notice explained it was seeking to exercise its Section 231 funding power over its concerns about the level of payments to the scheme - this would allow the regulator to impose a new recovery plan. TPR later opened an anti-avoidance investigation, following the dividend payments by the company.

 

TPR said Southern Water and the scheme trustees have taken on board its concerns.

 

Nicola Parish, TPR’s executive director of frontline regulation, added: “The company and trustee’s decision in 2015 to halve contributions to the pension scheme and pay them over an extended period, whilst later paying substantial dividends, despite a growing scheme deficit meant the risk to member benefits was unacceptably high. This has now been addressed.”

 

This report sets out exactly how much more will be paid into the scheme, and when the payments will be made.

TwitterLinkedInFacebook
Add New Comment
You must be logged in to comment. Login or Register to access enhanced features of the website.

You might also like

Revealed: The Rewards 2019 shortlist

Revealed: The Rewards 2019 shortlist


Head of reward at SUEZ : “This sector is now seen as on a par with finance”

Head of reward at SUEZ : “This sector is now seen as on a par with finance”


400 pension schemes “believed to have failed” data review 

400 pension schemes “believed to have failed” data review 


Almost half of pensions accessed without regulated advice

Almost half of pensions accessed without regulated advice

LATEST PAYROLL AND REWARDS NEWS IN YOUR INBOX

Reward Strategy homepage
Reward Strategy RSS

Did you find our website useful?

Thank you for your input

Thank you for your feedback

reward-strategy.com - an online news and information service for the UK’s payroll, reward, pensions, benefits and HR sectors. reward-strategy.com is published by Shard Financial Media Limited, registered in England & Wales as 5481132, Axe & Bottle Court, 70 Newcomen St, London, SE1 1YT. All rights reserved. Reward Strategy is committed to diversity in the workplace.
© Copyright Shard Financial Media Ltd