High Court supports trustee's petition to wind up Biwater scheme sponsors

The corporate trustee of the defined benefit scheme has been granted permission to petition for the sponsoring company to be wound up. The decision means the sponsoring companies will be made insolvent and enable the Pension Protection Fund compensation to replace scheme benefits.

The High Court heard that as of the end of June 2023 the Biwater Retirement and Security Scheme was owed a total of £39.74m, including £8.5m worth of unpaid contributions and a further £32.2m from Biwater Holdings and Biwater International companies in a separate outstanding contractual obligation.

The scheme’s actuary XPS said the scheme had an asset value of £41.6m and total liabilities of £69.9m as of the end of December 2022, and was therefore in deficit of some £28.3m.

Brass Trustees said it had hoped money would come to the scheme. which has 769 defined benefit members and 31 DC members but has now reached the point where it has become of the view that it is very unlikely to see any injection of funds and hence the decision to ask for the companies to be wound up.

The scheme’s trustee told the High Court that the pension scheme was experiencing a significant level of ‘scheme drift’ and this was likely to get worse as members retired and it had to meet higher ongoing expenses. 

In conclusion, the Honourable Mr Justice Richard Smith said he agreed the trustee had no alternative as it needed to protect the members of the scheme as a whole, and approved the trustee’s decision.

Winding up and members’ interests

A spokesperson for Brass Trustees said: “The trustee has had to take the incredibly difficult decision to petition for a winding up order of Biwater to protect the members of the pension scheme. In doing so the trustee sought the court’s blessing for the action it was proposing to take.

 “This is a decision that the trustee has not taken lightly. Over the past few years, the trustee has been working with the companies, as they tried to improve the business’ fortunes, and to put the scheme on a more sustainable footing, including seeking recovery of significant, and increasing, monies owed by the companies to the scheme.

“However, there comes a point where members’ benefits are at undue risk and the trustee has to act to safeguard those benefits. The trustee has given the companies every opportunity to act to turn the business round.”

“The trustee has worked closely with both the Pensions Regulator and Pension Protection Fund in getting to this point and is grateful for the support provided by both organisations. Subject to meeting the qualification criteria, the trustee expects the scheme to enter the Pension Protection Fund on insolvency of the companies.”