The Pensions Regulator (TPR) has announced a proposed deal with ITV that will see the broadcaster transfer 2,800 members of the Box Clever Group Pension Scheme into its defined benefit (DB) pension fund.
The deal, if approved, will end a 13-year battle between ITV and the regulator about who is responsible for the scheme.
The scheme’s members will transfer from the Pension Protection Fund (PPF) to ITV’s £2.4bn DB fund following a data cleanse exercise, which could take as long as 12 months. Once this is done, members will receive their full benefits and any back payments due, with interest added.
In its half year results to 30 June, ITV said it expected to make a one-off payment of £25m into its pension fund next year to cover the costs of the transfer. On top of this, a “surety bond” will be provided to cover the value of transferred liabilities. ITV will also reimburse some costs to the PPF.
The broadcaster could still back out of the deal if the value of the liabilities being transferred “has materially increased since the date of the settlement agreement”, according to a statement from the regulator.
However, if it does so, TPR would be able to recommence regulatory action.
A 13-year pension saga
The Box Clever case has its roots in a joint venture between the TV rental business of Granada Television (now ITV) and Thorn (later called Carmelite, now liquidated).
Box Clever went bust in 2003, and in 2011 TPR applied successfully for a series of Financial Support Directions to recoup money for the Box Clever Group Pension Scheme from ITV group companies.
However, the company appealed, arguing that as it had never participated in the Box Clever scheme it had no control over the deficit. The trustees argued that ITV had made money from the Box Clever joint venture and so had an obligation to the pension scheme – a position with which the regulator agreed.
Read our story from January 2012: Dancing on thin ice or boxing clever? ITV pursued for scheme financial support
Court battle begins
ITV appealed against the regulator’s Financial Support Directions in court. The hearing began in March with the Box Clever scheme’s trustees attempting to join the case as an interested party.
From our coverage at the time:
Michael Furness QC, representing ITV, told Judge Bishop, presiding: “Unnecessary costs of hundreds of thousands of pounds will be incurred for us, and we shouldn't have to pay it just because we've got lots of money.”
He argued the trustees' involvement would push up the cost to ITV of fighting the case, adding they do not have a right to join the proceedings just because they are an interested party.
The trustees' solicitor Giles Orton said the trustees' interests are not identical to those of the regulator and they have a right to make their own demands in court.
However, the trustees got their day in court and set out to recoup the money they felt was owed to their members.
Power to the regulator
Meanwhile, TPR had found itself frustrated that interested parties had not been forthcoming with information, meaning it had been forced to rejig the wording of its case. This in turn had led to pushback from the defendants in the court hearing.
TPR launched a consultation proposing increased information gathering powers for its independent determinations panel. This came to fruition in 2013.
In the meantime, appeal after appeal meant the case was dragging on, with no sign of either ITV or TPR giving in.
Read our story from August 2017: No end in sight for Box Clever case
Box Clever scheme members, meanwhile, received PPF-level benefits while in the lifeboat fund’s assessment period, which were capped at 90% of promised benefits up to a set limit. The scheme could not be transferred to the PPF until the case was completed, as the assessment period is designed in part to allow time for money due to the scheme to be recouped.
2018: TPR wins out in bruising appeal
January 2018 saw the case reach the Upper Tribunal court, where the two sides debated over the root cause of the scheme’s poor funding position.
The regulator focused on the establishment of Box Clever in 2000, using £850m of bank debt, while ITV scrutinised decisions made by the trustees.
Read our coverage: Regulator argues for retrospective moral hazard powers
Box Clever trustees under scrutiny for scheme setup decisions
The court ruled in favour of TPR in May 2018, saying the regulator was right to impose the Financial Support Directions.
ITV appealed first to the UK’s Court of Appeal, then to the Supreme Court, both of which rejected the bid to have the decision overturned. By this time – March 2020 – the Box Clever scheme’s deficit was reported to have swelled to £115m and members were no nearer a resolution.
Six months turns into four years
After the Supreme Court rejected ITV’s appeal, Erica Carroll, director of enforcement at TPR, said: “In a bid to avoid responsibility for the Box Clever scheme, ITV has used every possible legal channel to fight against our actions to safeguard the retirements of thousands of members.
“Now they have exhausted the legal process we look forward to receiving a credible plan to support the scheme and its members. ITV could have resolved this matter years ago and we hope they will now want to seek a swift resolution and provide closure to the scheme’s 2,800 members.”
TPR gave ITV six months to put financial support in place for Box Clever scheme members.
In August 2020, the broadcaster offered £31m, far less than the scheme’s estimated deficit, which had fallen slightly to £110m. TPR was unsatisfied with this offer and in May 2022 issued a warning notice, demanding a payment of £133m towards the Box Clever scheme.
The £25m figure in ITV’s latest results may reflect recent market movements, as DB scheme funding levels have vastly improved over the past two years.
However, with a detailed data cleansing exercise still to be carried out, members of the Box Clever scheme face a further wait. By the time this is completed, it will be 22 years since their former employer went bust and the pension uncertainty began.
