Northern Foods has completed a transaction to secure the pension benefits of 13,000 scheme members.
A support package was agreed between The Pensions Regulator (TPR), the scheme’s trustee, Boparan Holdings which owns the organisation, and Boparan Private Office. This includes £300 million in contributions to be paid into the pension scheme by June 2034. This aims to strengthen support for the scheme and help it to achieve self-sufficiency over the next decade.
As part of the package, 2 Sisters Food Group has also replaced Northern Foods as the scheme’s statutory employer. Boparan Holdings’ guarantee has been extended to cover all liabilities to Northern Foods, including the scheme’s full section 75 debt, and all Boparan Holdings’ subsidiaries have also provided guarantees.
As several Northern Foods businesses were sold for refinancing Boparan Holdings’ bond obligations between 2018 and 2020, the scheme will receive 100% of disposal proceeds from one remaining business and 30% from the other if sold. Boparan Private Office has also provided an unsecured guarantee for contributions due from Boparan Holdings and the statutory employer.
The package was implemented because, despite generating £400 million from the sales, Northern Foods only received a small share of the proceeds. However, Boparan Holdings issued a partial guarantee to reflect the reduced value of the direct covenant supporting the scheme following the sales.
Gaucho Rasmussen, executive director of regulatory compliance at TPR, said: “We expect trustees and sponsoring employers to work together to protect their pension scheme and its members. Where corporate transactions take place and the pension scheme is impacted, it’s vital that the pension scheme is treated equitably compared with other stakeholders.
“We can, and will, use our enforcement powers to support a fair outcome for pension scheme members. This includes pursuing financial support from organisations associated with the employers, including those outside the employer group.”
Northern Foods was contacted for comment prior to publication.
