Charity with £1.5m pension deficit partially saved

Finance | Gareth Jones | 25 Nov 2010

Home care services provided by Age Concern Barking & Dagenham, which went into administration earlier this year with a £1.5m pension deficit, have been saved by the neighbouring Age Concern Havering.

Administrators this week announced that Age Concern Barking and Dagenham’s home care division has been transferred to Home Age Care Solutions Ltd, which is managed by Age Concern Havering.

The home care division provides gardening, DIY and personal services such as nail clipping to elderly residents in the area.

Because of historic transfers of employees into Age Concern Barking & Dagenham from other organisations, by the start of this year it had accrued pension scheme liabilities estimated at over £1.5m, making it technically insolvent. After seeking legal advice, the trustees placed the charity into administration on 1 April.

Creditors are expected to receive 15p in the pound, though employees claiming up to £800 in wages and holiday pay are likely to be remunerated in full.

Administrators Re10 said the charity’s financial problems, including the pension deficit liability, were exacerbated by a fall-off in funding from Barking & Dagenham Borough Council.

Age Concern Barking & Dagenham was once one of the biggest Age Concern charities in London, with income of £2.4m at its peak. But in mid-2009 its activites were severely disrupted when one of its senior personnel was charged with fraud by police. Although the person was subsequently cleared of all allegations, the charity sustained a lot of bad publicity and lost a number of funding contracts.

Relations between the charity and the council worsened to the extent that in March this year, the council issued a statement saying it was “angry” at the conduct of the charity’s managers in the handover of two day centres, arguing that the charity had “deliberately 'dragged its feet' and used delaying tactics to derail plans to provide alternative services for pensioners”.

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