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| Guinness Peat told to boost Coats pension fund | Guinness Peat told to boost Coats pension fund |
| (35 minutes later) | |
| The Guinness Peat Group (GPG) has been told by the Pensions Regulator that it should pay more money into the pension scheme of the Coats textile company to pay off its deficit. | The Guinness Peat Group (GPG) has been told by the Pensions Regulator that it should pay more money into the pension scheme of the Coats textile company to pay off its deficit. |
| Coats, which makes thread, yarn and zips, is the last remaining business of GPG, which has been hoping to refloat the firm on the stock market. | Coats, which makes thread, yarn and zips, is the last remaining business of GPG, which has been hoping to refloat the firm on the stock market. |
| The Coats pension scheme, which has 27,000 members, has a deficit of £148m. | The Coats pension scheme, which has 27,000 members, has a deficit of £148m. |
| GPG has been in a wrangle with the regulator for nearly two years. | GPG has been in a wrangle with the regulator for nearly two years. |
| It has already issued the company with two formal warning notices to increase the funding of the two other pension schemes for which it is responsible: those of Staveley and Brunel, which together have deficits amounting to £89m. | It has already issued the company with two formal warning notices to increase the funding of the two other pension schemes for which it is responsible: those of Staveley and Brunel, which together have deficits amounting to £89m. |
| The notices, which could eventually lead to direct orders to increase the funding of those two schemes, are being formally disputed by GPG. | The notices, which could eventually lead to direct orders to increase the funding of those two schemes, are being formally disputed by GPG. |
| The company said it would also dispute the latest warning, about the Coats scheme, because it did not believe that it required extra funding. | The company said it would also dispute the latest warning, about the Coats scheme, because it did not believe that it required extra funding. |
| "As previously indicated the Board, having taken external advice, submitted calculations to the pensions regulator which showed that all the sponsoring companies for the Coats plan were sufficiently resourced as at the relevant date," said Mike Clasper, the chairman of GPG. | "As previously indicated the Board, having taken external advice, submitted calculations to the pensions regulator which showed that all the sponsoring companies for the Coats plan were sufficiently resourced as at the relevant date," said Mike Clasper, the chairman of GPG. |
| "It is therefore extremely disappointing to receive the warning notice in relation to a scheme for which a recovery plan was agreed with the Trustees in 2013. " | "It is therefore extremely disappointing to receive the warning notice in relation to a scheme for which a recovery plan was agreed with the Trustees in 2013. " |
| 'Insufficiently resourced' | 'Insufficiently resourced' |
| In June last year GPG agreed to double its annual contributions to the Coats scheme to £14m a year, following the scheme's formal valuation at the end of 2012. | In June last year GPG agreed to double its annual contributions to the Coats scheme to £14m a year, following the scheme's formal valuation at the end of 2012. |
| The company recently told its investors that it had £369m in cash to fund itself. It hopes to rename itself as Coats in due course. | |
| Of the 27,000 members of the Coats scheme, only 200 are active contributors. | Of the 27,000 members of the Coats scheme, only 200 are active contributors. |
| About 10,000 are deferred members - former employees who have yet to draw their pensions - and 17,000 are pensioners. | About 10,000 are deferred members - former employees who have yet to draw their pensions - and 17,000 are pensioners. |
| This saga at GPG is unusual as the regulator has invoked powers, to direct employers to pay more money into their pension schemes, which have been rarely used since its inception in 2005. | This saga at GPG is unusual as the regulator has invoked powers, to direct employers to pay more money into their pension schemes, which have been rarely used since its inception in 2005. |
| The company revealed that the regulator was worried that GPG and its Coats subsidiary were "insufficiently resourced". | The company revealed that the regulator was worried that GPG and its Coats subsidiary were "insufficiently resourced". |
| However a spokesman for the regulator was unable to explain exactly what that meant because such information was "restricted". | However a spokesman for the regulator was unable to explain exactly what that meant because such information was "restricted". |
| Cotton thread invented | Cotton thread invented |
| GPG will try to fend off the warning notice by negotiation. | GPG will try to fend off the warning notice by negotiation. |
| But if that fails the issue will go to the determination panel of the regulator, sometime in 2016, for a final decision. | But if that fails the issue will go to the determination panel of the regulator, sometime in 2016, for a final decision. |
| That could lead to a direct order to GPG and its Coats subsidiary to pledge more money to the Coats pension scheme. | That could lead to a direct order to GPG and its Coats subsidiary to pledge more money to the Coats pension scheme. |
| Meanwhile the determination panel will hear GPG's appeal against the Brunel and Staveley warning notices in 2015. | Meanwhile the determination panel will hear GPG's appeal against the Brunel and Staveley warning notices in 2015. |
| The original Coats business was founded in Scotland in 1755 and invented the process for making cotton thread. | The original Coats business was founded in Scotland in 1755 and invented the process for making cotton thread. |
| It floated on the London Stock Exchange in 1890 and, via series of mergers, has been known as Coats Patons and later Coats Viyella. It was bought by GPG in 2003. | It floated on the London Stock Exchange in 1890 and, via series of mergers, has been known as Coats Patons and later Coats Viyella. It was bought by GPG in 2003. |