The Pensions Trust could receive up to £1.3m less than it was offered by People Can as a full and final settlement of its pension debt, figures published by the public services charity's administrators suggest.
People Can went into administration because of a pension debt of about £17.8m. According to a document published by the financial services firm PwC, it is likely to be able to pay unsecured creditors 18 pence for every pound owed.
If the figure proves correct, the Pensions Trust, which ran the charity’s defined-benefit pension scheme and is the charity’s largest creditor by far, is likely to receive about £3.2m. Maff Potts, chief executive of People Can at the time it went into administration, said that before the charity shut down he offered the Pensions Trust £4.5m as a full and final payment.
Potts told Third Sector the move would have allowed his charity to continue as a going concern, and would not have risked losing the cover of the Pension Protection Fund, which protects members of pension funds in case their employer has insufficient assets.
But Stephen Nichols, chief executive of the Pensions Trust, which runs pension schemes for more than 2,400 not-for-profit organisations, said that PwC’s suggested figures were a worst-case scenario and that it was likely his organisation would recover substantially more.
"We could recover something similar to the £4.5m that People Can offered us," he said.
Nichols said it was important that his organisation was able to make sure it remained eligible for the Pension Protection Fund. The Pensions Trust has previously indicated that voluntarily writing off some of People Can’s debt could have put its own standing with the PPF at risk.
"With that in mind, if People Can had offered us twice as much it wouldn’t have been worth the risk," said Nichols this week.
Other unsecured creditors are owed about £3.7m and would be likely to receive around £650,000. Preferential creditors – staff owed wages and leave – are owed £174,000 and are expected to be paid in full. The PwC document, published last month, indicates that unsecured creditors could face a wait of 18 months before they receive their payments.Nichols said the administrators had told him that the administration process could cost the defunct charity about £1.3m.