Navca and Community Matters abandon merger plans because of pension deficit fears

Community Matters will restructure to remain independent and its chief executive, David Tyler, will step down

David Tyler
David Tyler

The local umbrella bodies Navca and Community Matters have abandoned plans to merge because of fears about their combined pensions deficits.

The two organisations, which announced last summer that they had begun merger discussions, said today in a joint statement that they were concerned the new organisation "would be hindered by pension deficits with the potential to escalate".

"Having thoroughly investigated all options, Navca and Community Matters have announced that the proposed merger between the two organisations will not proceed," the statement said.

"They will both now plan their futures as separate organisations. Both bodies have rising pension debt on withdrawal with the Pensions Trust and, after a detailed appraisal of the situation, both felt unable to pursue a merger for fear that a merged organisation would be hindered by pension deficits with the potential to escalate."

Both organisations are members of the Growth Plan, which consists of four multi-employer pension schemes operated by the Pensions Trust.

Community Matters’ accounts for 2011/12 say that its pensions deficit on withdrawal from the scheme would have been £328,005 on 31 March 2012.

Navca’s pensions deficit on withdrawal was assessed at £82,801 on 30 September 2011, its 2011/12 accounts say.

Withdrawal from a scheme usually requires an organisation to pay all of its pension deficit immediately, and the deficit can be several times larger than if it remains in a scheme.

It is not clear whether the merger would cause either organisation to have to withdraw from the scheme immediately, but it is likely that it would be difficult for both organisations to remain in the scheme in the long term.

Members of both Navca and Community Matters had voted in favour of the merger at their separate annual general meetings last year.

Joe Irvin, chief executive of Navca, said in the statement that something had to be done to tackle the escalating problem of pension debt in the voluntary sector.

"We have worked hard at these discussions and our trustees saw real benefits in bringing our members together for the benefit of local communities," he said.

"But although we had overcome most of the obstacles that often prevent merger, we were scuppered by concerns about the rising pension debt."

Community Matters said it would restructure in order to remain as an independent organisation, and David Tyler, its chief executive, said he would stand down.

"I have great confidence that these changes will position Community Matters to survive and thrive in these austere times, and to get closer to our members and the local agencies they work with," said Tyler. "I will personally be stepping aside to facilitate this move, but will retain a keen interest in the organisation’s future."

The move comes after People Can, which supported vulnerable people, went into administration towards the end of 2012 after failing to agree a deal to pay off its £17m pension deficit.

People Can was formed as the Novas Scarman Group in 2007 after the merger of the Scarman Trust, the homelessness charity the Novas Group and the employment charity Path.

It was a member of the Social Housing Pension Scheme, a multi-employer defined-benefit scheme run by the Pensions Trust.

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