Pension storm heading for rail bosses
The owner of the GNER rail franchise looks set for conflict with the UK's pension regulator over deficits on two of its schemes.
Sea Containers, based in Bermuda, is waiting to hear if the regulator will impose `financial support directions' (FSDs) to oblige it to pay off deficits in those schemes.
But there has been speculation over the regulator's power to make the FSDs stick when dealing with an overseas company.
Sea Containers is already deep in financial trouble, having sought Chapter 11 bankruptcy protection in the US last month for several of its businesses, having racked up debts of some £350m.
While GNER is not one of the companies sheltering from the prospect of bankruptcy, and its staff have a separate pension fund, this new twist in the fortunes of Sea Containers will again throw doubt on the future operation of the east coast mainline.
Sea Containers says it "does not accept that it is reasonable or appropriate for the regulator to issue FSDs."
If regulator David Norgrove does pursue Sea Containers over its deficits, this will apparently be the first time FSD powers have been enforced since the Office of the Pensions Regulator was established 18 months ago.
Lawyers are said to have questioned the wisdom of targeting an overseas company in this way with a mechanism that is yet to be proven workable.
If Mr Norgrove fails in his action, there is concern that a precedent could be set, where it would be demonstrated that overseas companies could simply walk away from their responsibilities with insolvent subsidiaries in the UK.
If such a situation were to arise it would certainly place a huge burden on the Pension Protection Fund - the insurance fund for underfunded schemes of insolvent employers.
The two affected pension funds are the 1990 and 1983 Sea Containers final salary pension schemes which are thought to have around 1,300 members.
