Emap has decided to sell its two largest defined benefit pension schemes to Paternoster, transferring its assets and liabilities to the insurance company.
The buyout deal means that the media company will be able to secure their employees’ benefits in full and remove the defined benefit liability from the company balance sheet, which could remove a hurdle that might have deterred potential buyers of the media company, which is currently up for sale.
Emap and the Group’s trustees have agreed to transfer all the group’s obligations in respect of the Emap Earnings Related Pension Plan (EERPP) and the Scottish Radio Holdings Scheme (SRH) to Paternoster with immediate effect. Emap made a final cash contribution into these schemes of approximately £40m and the value of the assets being transferred is approximately £170m.
The transfer will secure in full the accrued benefits for the members of the schemes and remove all the remaining financial risks and liabilities relating to these schemes from the employer.
Ian Griffiths, group finance director at Emap, said: “Throughout this process this competitive process, Emap had two clear objectives for this transaction – our desire to secure EERPP and SRH scheme members’ benefits in full and secondly, to remove all pension risk for Emap’s shareholders. We are pleased that these objectives have both been achieved through Paternoster’s innovative and flexible approach.”
Mark Wood, chief executive at Paternoster said that company sponsors and trustees are increasingly recognising the merit of securing the promise to pay pensions through the backing of a regulated insurance company, indicating that this move could be the first of many in which companies sell their pension funds by other companies.
Actuary Mercer advised Emap and the trustees.