The Pensions Regulator (TPR) has requested that Duke Street Capital, a private equity group, pay money into a pension scheme of a company it no longer owns.
Duke Street Capital sold Focus DIY to Cerberus Capital Management in June 2007 but TPR has gone after the former owner instead of issuing the current sponsoring employer with a contribution notice. TPR has confirmed that the move was powered under its old rules and was not made in light of the DWP’s proposed extension to the anti-avoidance powers which are aimed at preventing private equity groups from buying companies to benefit from their pension schemes.
It is believed that Duke Street Capital has been required to contribute £8 million to the deficit of Focus DIY’s defined benefit scheme.
Comment: this is the first case where TPR has directed that a private equity company be responsible for pension funding in respect of a sold company’s scheme and some may consider this an unacceptable extension of TPR’s powers.