People Can goes into administration due to £17m pension deficit

People Can goes into administration due to £17m pension deficit

People Can goes into administration due to £17m pension deficit5

Finance | Vibeka Mair | 20 Nov 2012

The charity People Can, formerly known as Novas Scarman Group, has gone into administration, blaming a £17m pension deficit.

The charity, which works with individuals experiencing homelessness and domestic abuse, as well as providing rehabilitation for ex-offenders, has over 250 staff, and worked across the UK. Some are believed to have been made redundant already.

Its income in 2010/11 was £11.9m.

PricewaterhouseCoopers, who have been appointed administrators for the charity, said it was talking with local authorities about whether they would maintain services delivered by People Can and take on its staff.

David Hurst, joint administrator and director at PwC said: "Our immediate priority is to safeguard the excellent services that People Can provides across the UK.  The local authorities that outsource contracts to the charity were informed of the precarious position early last week and were asked to seek successor providers as a matter of urgency. We are continuing to work with them very closely to ensure a smooth transition of these services wherever possible.

"The charity's significant pension liabilities dated back many years to its previous role as a Registered Social Landlord.  A range of restructuring options were explored, however a deal could not be reached that worked for all stakeholders."

year, following a £3m funding cut across its services.

The Novas Scarman Group was formed by a in 2008.

Commenting on how issues around pension obligations are impacting companies and charities more widely, Jonathon Land, partner and head of pension credit advisory at PwC added:

“Many companies and charities are struggling to cope with their rising pension obligations.  Historically low gilt yields, poor investment returns and ever-increasing mortality assumptions have inflated these deficits to a point where it is creating significant pressure on companies’ and charities' cashflows.  This is particularly acute where the size of a pension scheme is large relative to the size of a charity. 

"Although proactive action will often relieve pressure, unless the economic environment changes to make pension obligations more manageable, we could expect further insolvencies in the charity space.”

Ross Hughes
Hostel manager
Ex People Can hostel manager
29 Nov 2012


Lots in this story that has yet to come out. In 2008 there was a transfer of housing stock to another provider. Looks like for some reason the housing stock was transfered and not the pension lliabilities anchored against the value of property. As the value of the liabilities increased and the value of the small amount of remaining housing stock decreased the organisation was forced into administration. Lots of questions staff want to ask of the advice offered to the company at the time. The TSA had actually appointed members of staff to the board to oversee the process and leave the new deregistered charity viable, so issues around government governance. Really sad for many colleagues who have lost jobs and services that have closed. Also a bit sorry for senior managers including the present CEO most of whom weren't around in 2008 and had been working hard to turn the organisation round.

Rachelle Howard
Social Media Administrator
23 Nov 2012

This amazing way with disadvantaged people has benefited many in the South East. I speak of their staff who are inspirational, we will miss them and their wisdom greatly. Several groups have evolved to become sustainable thanks to their networks, training and support; empowering individuals to be the best that they can be, role modelling their good practice, skills and knowledge to others in their community. Many people's lives have been made healthier as a direct result of their belief in small projects delivering directly to hard to reach groups as a positive solution to isolation and health inequalities. Their legacy will continue in those that have worked with them and grown thanks to them. They will not be forgotten.

Geoff Baker
Executive Director
20 Nov 2012

My sympathy lies with staff who have lost their jobs and to those further staff who will lose their jobs in the future. However the blame for this sad debacle must lie at the doorstep of the Directors and senior management. The amount of the pension deficit is mindblowing, and leaves questions as to how the management and accountants of People Can could allow the charity to continue trading knowing it could never meet its pension obligations? Yearly audits should bring such problems to the Board of Directors when immediate action should be taken to prevent further problems occurring.

Alan Collins
Spence & Partners
21 Nov 2012
Response to [Geoff Baker]

It is clearly a difficult time for all concerned at the organisation. This situation also provides further evidence that pension liabilities are causing increasing problems in the sector.

In response to Geoff's comment above, it may be a surprise to learn that the pension scheme deficit was not included in the organisation's balance sheet on a year to year basis due to an "opt-out" provision currently available for multi-employer schemes (which this organisation was part of). In other words, the pension deficit was never actually recognised in the accounts.

This is an issue which is (finally) being addressed by the accounting profession although it is meeting with some resistance.

Lance Clarke
20 Nov 2012

I greatly sympathise - not sure if the pension scheme is local government or other provider. If local authority then the values rocket sky high. If task transfers so can the staff.


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