Belgian firm VDW to appeal £5m order

Jun 30 2010 by Peter McCusker, The Journal

THE Pensions Regulator has ordered a Belgian company to stump up £5m after it found it had put a Gateshead subsidiary into pre-pack administration to avoid its existing pension liabilities.

Loss-making Team Valley machine company Bonas was bought by Belgium VDW in 1998. Almost 10 years later, staff numbers were cut from 200 to 50.

In December 2006, VDW put Bonas into administration and on the same day the business and assets of Bonas were transferred to a new company, BMC Engineering with the liability for the pension scheme staying with Bonas. The Pensions Regulator ruled VDW must reimburse the Bonas pension fund £5m – a decision which VDW has said it will appeal.

Bill Gavin, the Pensions Regulator acting chief executive, said: “Where attempts are made to avoid companies’ pension obligations we will use our ‘moral hazard’ powers to protect members’ benefits and the Pension Protection Fund.”

This is the first Contribution Notice ordered by the Pensions Regulator since it was established in 2005.