The UK’s Pensions Regulator is probing concerns that P&O Ferries has failed to pay a £146mn debt owed to its 20,000-member group pension scheme.
The ferry operator owes the largest proportion of the £1.25bn scheme’s overall deficit, but had not made any voluntary contributions since its acquisition in 2006 by logistics giant DP World, which is majority owned by the Dubai Sovereign Wealth Fund, according to a High Court ruling in 2015.
P&O Ferries and its owner have come under intense criticism for their decision to sack 800 UK-based crew with no notice on Thursday, in order to cut costs by replacing them with cheaper agency staff.
The ferry company has lost £100mn a year over the past two years, and said its business was not “viable” with its current staffing structures. The new structure will cut staff costs by roughly 50 per cent, according to an internal email seen by the Financial Times.
The losses have been absorbed by DP World, which reported record results for 2021, with earnings before interest, taxes, depreciation and amortisation increasing 15 per cent to $3.8bn.
The Labour party wrote to The Pensions Regulator in January calling on the watchdog to probe P&O’s unpaid contributions owed to the Merchant Navy Ratings Pension Fund.
Matt Rodda, shadow work and pensions secretary, told parliament in June 2021 that the debt could cause “serious problems” for the fund, which has 20,000 members who work in a wide range of companies far beyond P&O.
On Friday, the Pensions Regulator confirmed it had received a letter from Rodda in relation to the MNRPF.
“We are working closely with the trustee of the MNRPF in our role to protect pension scheme savers,” said the regulator. “We are not commenting further at this stage.”
The MNRPF scheme reported a deficit of £96mn at its latest valuation in 2020. As a last-man-standing multiemployer pension scheme, if a participating employer is struggling to pay contributions, the knock-on effect is that other employers are required to meet the default contributions. There are roughly 100 employers participating in the scheme, but only about half of those are required to contribute.
P&O has paid more than £80mn into the fund since 2016, and the outstanding deficit is secured against two of the ferry company’s ships, according to a person briefed on the matter.
P&O declined to comment on its pensions liabilities.
The trustees of the scheme said: “We are working with the Pensions Regulator in support of any investigation or action that would protect the interests of the fund, both in regards to security of members’ benefits and impact on other participating employers.”
In 2018, the Pensions Regulator opened an investigation into the governance of the MNRPF and issued a warning notice the following year setting out its recommendation to appoint an independent trustee to the scheme because of numerous governance issues.
Additional reporting by Simeon Kerr in Dubai