The National Institute of Agricultural Botany (NIAB) Trust has agreed to take on shared responsibility for a £38.6m pension liability after two years of discussions with the Pensions Regulator.
The NIAB Trust, which was created as a separate entity when NIAB split into two charities in 1998, agreed to the change after the regulator threatened to make a formal direction.
A vulnerable pension scheme
NIAB was founded in 1919 and was a single entity until 20 years ago, when the Trust was established to take responsibility for the institute's main assets, including land and buildings. NIAB maintained responsibility for day-to-day research into crop science, as well as the pension scheme.
This restructure “left the [pension] scheme in a vulnerable position”, according to a statement by the regulator, which notes that the pension scheme trustees failed to secure formal support from the Trust in helping meet the liabilities in 2015.
The potential debt owed on the scheme is £38.6m, according to the Trust’s most recent annual accounts lodged with Companies’ House.
By 2017 NIAB was solely exposed to the pensions liability while holding assets of just £3.7m, compared to £50.5m at the Trust.
Warnings of regulatory action
In June 2018, the regulator considered whether it would be appropriate to make a financial support direction (FSD), which would have required the Trust to help NIAB meet the pensions deficit.
Negotiations opened between the two organisations, and in September 2018 the regulator issued a formal warning that it would seek an FSD if no agreement was reached.
The case was finally concluded in December last year, when “a settlement was agreed which saw NIAB Trust becoming a statutory employer to the scheme. This means that it now shares responsibility for the full scheme deficit with NIAB.”
The regulator said: “Thanks to the hard work of all the parties involved, the scheme now has two statutory employers and has greater access to the assets of NIAB Trust for the benefit of its members.
“The case demonstrates that we will work with employers, trustees and the targets of our FSD powers to achieve the best possible outcome for members.
Their statement added that the process had saved public costs because it showed “good outcomes [can be] achieved without the need for us to formally use our powers and the associated costs that a Determinations Panel process and/or an Upper Tribunal hearing would involve”.
Civil Society News was unable to reach either NIAB or the Trust for comment. Records at the Charity Commission show that the Trust is 188 days late filing its accounts.