EXCLUSIVE: Wedgwood pension fund debt

Everyone associated with Staffordshire’s Wedgwood Museum must have felt an unwelcome sense of shock when it discovered it was responsible for the entire £134m deficit of the Wedgwood Group Pension Plan, as the ‘last man standing’ employer within the company.

The Waterford Wedgwood group went into administration in January 2009 and the pension plan has been in Pension Protection Fund assessment (PPF) since then. A High Court ruling in December 2011 decreed that the Museum’s collection is an asset of the business and can therefore be sold off to help repay creditors, including the PPF. A full written judgement is due on February 9.

From a cultural perspective, the breakup of the collection would be a tragedy. But if the assets of the scheme had been more mundane - unremarkable buildings or government bonds - the news of the judgment would have passed practically unnoticed in the pensions and national press. The aim of such decisions is to protect the PPF and keep the levy as low as possible for those schemes that pay into it.

However, could the Wedgwood Museum have avoided the debt all together? It is suggested that there was a missed opportunity for the museum trustees to pay to pull its members out of the scheme, thus avoiding the last man standing rule, but it is claimed that the opportunity was missed.

In 2009, a meeting took place between George Stonier, chair of the Wedgwood Group Pension Fund Board, Richard Favier, head of recoveries of the PPF, pension fund trustees Christopher Johnson and Jim Harding, and a trustee of the Wedgwood Museum Trust.

At this point in time George Stonier was chair of the Wedgwood Group Pension Fund Board as well as chair of the Wedgwood Museum Trustees, although he has since stood down as chair of the pension fund. In an email to Pensions Insight, Mr Stonier, wrote: “Neither the directors of the Wedgwood Museum nor, I believe, the pension trustees and their actuarial and legal advisers were aware at the relevant time that there existed a legitimate means of crystallising the Museum’s liability according to the number of Museum employees in the Wedgwood Group Pension scheme. This was the case notwithstanding that the minds of individuals with considerable expertise in this extraordinarily complex area were applied in trying to secure precisely this outcome. A meeting of the individuals to whom you refer did take place, but not until after the period in which the Museum’s liability could have been minimised had expired.  Nobody at that meeting identified the opportunity that was lost.”

Wedgwood family member Alison Wedgwood, who is campaigning to save the collection from being sold off, believes the £134m liability could have been bought off for just £100,000. But none of the pensions experts spoken to by Pensions Insight has been able to confirm whether such an option was ever available to the museum. A PPF spokesman confirmed that it was present at several meetings with the scheme trustees around this time, that there was discussion regarding the pension debt but the PPF was not there in an advisory capacity.

Mr Johnson, the current pension fund trustee chair, asked whether the option to crystallise the debt was an entitlement or depended on a discretionary decision of the pension scheme, or on any other factor declined to comment. Mr Johnson also would not say when or if the museum trustees or pension fund trustees were aware of the existence of such an option, and would not comment on the extent of communication between the two sets of trustees over the question of crystallising the debt.

Mercer acts as actuary and investment adviser to the scheme. Mercer said it did not comment on matters concerning clients. Allen & Overy acted as legal adviser to the pension scheme but had no duty to the Museum. When asked whether it was aware of a theoretical opportunity to crystallise the debt, Allen & Overy declined to comment on the details of its advice to the pension scheme. Mr Johnson said he was satisfied with the performance of all of the scheme’s advisers. The advisers to the Museum Trust could not be ascertained at press time.