The debt-laden publisher went into administration on Saturday only to be bought out within hours by JPIMedia, a newly incorporated company made up of its previous lenders, in a so-called “pre-pack” deal.
The new owners agreed to wipe out £135m of JP’s £220m debt and inject £35m of fresh capital into the business, but the company’s defined benefit pension scheme, which has estimated liabilities of £109m, did not transfer over.
Instead, the Pension Protection Fund, a ‘lifeboat’ scheme set up by the government to provide pension benefits to members of schemes whose sponsoring employers have become insolvent, will now assess whether it needs to take responsibility for the scheme.
Veteran MP Frank Field, chairman of the backbench Work and Pensions Select Committee, said it was “difficult to understand” how the new owners had been able to acquire the business without taking responsibility for its pension scheme.
He has now written to Lesley Titcomb, chief executive of the Pensions Regulator, to ask about its involvement in discussions with Johnston Press.
Mr Field, pictured, wrote: “In particular, it would be helpful to have an explanation of why it was not possible to find a solution that would have avoided the pension scheme entering the PPF.
“It is difficult to understand why it is possible for JPIMedia to acquire the business, no doubt in the expectation of generating a profit from it, but without taking any responsibility for its pension scheme.
“Might I ask whether, in the light of this and similar cases, you consider that adequate protections are in place to prevent schemes being dumped on the PPF, at cost to pensioners and levy-payers.”
The PFF has itself voiced “concerns” over the rescue deal and has also raised the issue with the regulator.
A spokesperson said: “We have concerns surrounding the circumstances of this pre-pack administration. We will continue to work closely with the Pensions Regulator and the company administrator to ensure the best outcome for the PPF and our levy payers.
“We want to reassure members of the Johnston Press Pension Plan that their benefits are protected by the PPF at what must be an unsettling time for them.”
Shadow culture secretary and deputy Labour leader Tom Watson also raised the pensions issue in an urgent question to his opposite number, culture secretary Jeremy Wright, in the Commons today.
Mr Wright responded: “Anyone in receipt of their pension now will continue to be paid, the changes will affect those who are currently in employment and we believe 250 or so in total.”
Christen Ager-Hanssen, whose 25.06pc shareholding in the old JP was rendered worthless by the decision to take the company into administration, is seeking to form a JP Shareholders and Pensioners Action Group to represent those who lost out as a result of the deal.
Johnston Press/JPIMedia have not so far responded to the issues raised by Mr Field and others today.
Chief executive David King has previously expressed his regret at the impact of the deal on pension scheme members in a letter to staff sent out on Friday night.
He wrote: “Those of you who are members of the defined benefit pension scheme – which is 250 members of the current workforce – will see your future pension payments affected in line with PPF payment rules.
“I am deeply sorry about that, but we have explored in detail all other possibilities. The negative effects on the scheme are an inescapable consequence of taking the steps needed to ensure the future of the business.
“It will be up to the trustees of our pension fund to contact you to tell you what this means.”