Pensions watchdog under fire over £419m Kodak settlement

Pressure is mounting on the Pensions Regulator to publish a report into its handling of camera firm Kodak UK's retirement fund.

Leading pensions consultant John Ralfe has warned that a deal allowing the pension scheme to withdraw a £1.9bn legal claim against its bankrupt US parent, Eastman Kodak, in exchange for two of its businesses could end up costing thousands of UK pensioners.

In a research note seen by The Independent, Mr Ralfe said the scheme, with 15,000 pensioners, should have been allowed to enter the Pension Protection Fund (PPF) while the regulator pursued the claim through the bankruptcy courts.

The PPF is an industry-funded pensions lifeboat, which takes on schemes of collapsed companies. Instead, the UK scheme last week paid $650m (£419m) to the US company to help it emerge from bankruptcy. In return, the UK scheme will receive Kodak's personalised imaging unit, which includes most consumer products and retail printing kiosks, and document-imaging business that makes scanners for business customers.

Antonio Perez, the chairman of Eastman Kodak, described it as an "extraordinary result" as he tries to revive the company, which collapsed into bankruptcy in January 2012 after failing to adapt to the rise of the internet and smartphones.

Mr Ralfe said: "By approving this deal, the Pensions Regulator seems to have abandoned rule-based pension regulation, and moved to 'regulation-by-expediency'.

"This approval combined with other approvals in recent months — Trinity Mirror, Premier Foods, and UK Coal — prompts the question: 'Has the Pensions Regulator given up on regulating pensions?' "

Reflecting on his preferred course of action, Mr Ralfe added: "Like all unsecured creditors, the pension plan would, eventually, receive a share of company assets, which may include equity in a new company (the Regulator is currently pursuing Nortel and Lehman Brothers through the North American Courts). Rather than this tested and transparent mechanism, a new Kodak UK pension plan will be formed — a zombie with no corporate sponsor standing behind it to make deficit contributions."

He said the Regulator should produce a Section 89 report to explain why buying two Kodak businesses for £491m and giving up the £1.9bn claim was the best deal the regulator could achieve.

A spokesman for the Pensions Regulator told The Independent: "Where the sponsoring employer is at risk of going insolvent and the scheme is underfunded, we work with the trustees to try to get the best protection for scheme members.

"We take a transparent approach and, at the outcome of a number of key cases, we have published reports setting out our decision-making. We do this to help interested parties understand the issues and our approach."

The Regulator, which is chaired by Michael O'Higgins, former managing partner of PA Consulting, and is overseen by the Department for Work & Pensions, promised: "We will consider whether to publish a report on the Kodak case once the acquisition is completed." That is likely to be in the autumn.

Other pensions experts were mixed on the Kodak deal. Kevin LeGrand, of the Society of Pension Consultants, said: "This deal is the latest in a line of cases where the regulator is seeking to walk a fine line between the interests of a number of parties.

He added: "The regulator is prepared to consider deals that offer a reasonable chance of the scheme remaining out of the Pension Protection Fund. Whether or not it has made the right call on a particular case will only be clear at some point in the future."

Start your day with The Independent, sign up for daily news emails
News
people
News
A survey carried out by Sainsbury's Finance found 20% of new university students have never washed their own clothes, while 14% cannot even boil an egg
science...and the results are not as pointless as that sounds
News
politicsIs David Cameron trying to prove he's down with the kids?
News
Businessman at desk circa 1950s
news
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Client Services Manager - Relationship Management - London

£30000 - £32000 per annum + benefits : Ashdown Group: A highly successful, int...

Recruitment Genius: Credit Controller / Customer Service

£18000 - £20000 per annum: Recruitment Genius: This rapidly expanding business...

Guru Careers: In-House / Internal Recruiter

£25 - 28k + Bonus: Guru Careers: An In-house / Internal Recruiter is needed to...

Recruitment Genius: Tax Assistant

Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...

Day In a Page

Woman who was sent to three Nazi death camps describes how she escaped the gas chamber

Auschwitz liberation 70th anniversary

Woman sent to three Nazi death camps describes surviving gas chamber
DSK, Dodo the Pimp, and the Carlton Hotel

The inside track on France's trial of the year

Dominique Strauss-Kahn, Dodo the Pimp, and the Carlton Hotel:
As provocative now as they ever were

Sarah Kane season

Why her plays are as provocative now as when they were written
Murder of Japanese hostage has grim echoes of a killing in Iraq 11 years ago

Murder of Japanese hostage has grim echoes of another killing

Japanese mood was against what was seen as irresponsible trips to a vicious war zone
Syria crisis: Celebrities call on David Cameron to take more refugees as one young mother tells of torture by Assad regime

Celebrities call on David Cameron to take more Syrian refugees

One young mother tells of torture by Assad regime
The enemy within: People who hear voices in their heads are being encouraged to talk back – with promising results

The enemy within

People who hear voices in their heads are being encouraged to talk back
'In Auschwitz you got used to anything'

'In Auschwitz you got used to anything'

Survivors of the Nazi concentration camp remember its horror, 70 years on
Autumn/winter menswear 2015: The uniforms that make up modern life come to the fore

Autumn/winter menswear 2015

The uniforms that make up modern life come to the fore
'I'm gay, and plan to fight military homophobia'

'I'm gay, and plan to fight military homophobia'

Army general planning to come out
Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

What the six wise men told Tony Blair

Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

25 years of The Independent on Sunday

The stories, the writers and the changes over the last quarter of a century
Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

Homeless Veterans appeal

As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

Smash hit go under the hammer

It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

The geeks who rocked the world

A new documentary looks back at origins of the computer-games industry
Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

Belle & Sebastian is taking a new direction

Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea