Exclusive: Entain set for £7.5m windfall from employee pension scheme despite objections

Entain is primed to receive a £7.5m lump sum payment from the winding up of the Ladbrokes pension plan, EGR can exclusively reveal. An internal letter from Ladbrokes Coral Pension Trustees, as seen by EGR, shows trustees agreed to the lump-sum payment, despite the objections of 18 members. In October, pension scheme members were given until 10 December to object to the proposed payment, which forms part of a so-called pension scheme-buyout plan. This is where a pension fund sponsor (such as a large company) pays a fixed amount to free itself of any liabilities (and assets) relating to that fund. The other party, often an insurer and in this instance Rothesay Life, receives the payment but takes on responsibility for meeting pension scheme liabilities going forward. The letter states: “The trustee recognises the importance of considering members views on this issue and has reviewed and discussed each of those representations in detail. “Having carefully considered all of the representations made by members, the trustee has decided it is still appropriate to proceed with the proposed refund of surplus assets to the company,” it adds. Factors considered by the trustees include the full securing of all plan benefits to members as required by the plan, as well as contributions made by both the company and members alike. Between June 2002 and June 2013, Entain, then known as GVC, contributed £233m to the plan while members contributed £21m. Between June 2013 and June 2019, GVC made total employer pension contributions of  £19.7m compared to member contributions of £1.6m. After the formal valuation of the plan’s funding in 2010 identified a shortfall in the payment of member benefits, GVC paid deficit contributions of £5.3m a year until July 2014, and then £1.5m a year to June 2017 to ensure benefit obligations were met. This included continuing these for a period where the plan’s funding level meant that such contributions were not necessary. However, the letter suggests GVC chose to do so to facilitate the potential buy-out of the plan by another insurer. Once a scheme buy-out commences, any surplus funds cannot remain in the plan, and must either be paid out to the members in the form of extra benefits or back to the employer as a lump sum. On this occasion, the £7.5m lump sum will go to Entain. One objecting scheme member, who wished to remain anonymous, questioned whether the proposed buyout plan was in the best interests of pension scheme members, raising concerns about the future of the scheme following the transfer. “In the past when the trustees were former Ladbrokes people and employees of the company, they were relatively good at holding the company to account and ensuring they met their obligations to the fund,” the scheme member told EGR. “Now the company has managed get free of these obligations and whilst I am sure that Rothesay are a good company, I am not sure that the interests of the members are best served by this route. “However, the corporate trustees (probably under pressure from the company) have decided that this is an OK route to go down and I am not sure we can fight it. I still remain unconvinced that this is in the best interests of the members, which is something that has never been made clear to me,” they added. Under pension scheme law, members are still able to block the payment, but are given a final deadline of 19 May to voice their objections, which will once again be considered by trustees before a final decision is made.