Blackwell’s has completed an “all risks buy-in” of its defined benefit pension scheme with the Pension Insurance Corporation (PIC). The company said the move would take it “one step closer” to its long-term goal of becoming an employee-owned partnership, similar to that operated by retailer John Lewis.
The transfer of ownership of the retailer to its staff was first outlined by owner Toby Blackwell in an interview in The Bookseller in 2009, with the company striving to become profitable ahead of the switch. The retailer made its first profit in a decade in 2014 before slipping back into a loss the following year. Although a date has not been set for the launch of the partnership, legal documents are being finalised and preparations are under way. When completed, every employee will have a stake in the company as beneficiaries of an Employee Trust which will hold the shares on their behalf and have influence on how the business is run through a Partnership Council made up entirely of employee- nominated councillors.
The deal with PIC means that the assets and liabilities relating to the final salary pension scheme will no longer be required to be disclosed within the company’s annual accounts. The scheme was closed to new members in 2009, and currently pays more than £4m annually in pensions for 700 former employees, with a further 600 deferred members yet to reach pensionable age. The company now runs a defined contribution scheme (group personal pension plan) for its employees.
Blackwell’s added the move guaranteed Blackwell’s pensioners would receive their benefits in full and represented the first stage in a full “all risks buy-out of the scheme” that would provide long-term security. The buy-out is expected to be completed by the end of June this year. A buy-out would shift the liabilities of the defined benefit pension scheme to the insurer, de- risking the scheme.
David Prescott, Blackwell’s chief executive, said: “The buy-in of the pension scheme is a major milestone for the business as we move towards employee partnership. First, and critically, it is great news for all the members of the scheme, both employees and former employees, as it guarantees their pension incomes. Second, it puts the company in a stronger position as there’s no future possibility of any pension deficit for the company to make up. Third, it removes any barrier to the future partnership which could have arisen by needing to make further contributions to the scheme. To have achieved a fully funded buy-in of the scheme, given what has happened to so many other final salary schemes in recent times, is a testament to Toby and the trustees’ diligent management of the scheme over so many years.”