Exclusive: GVC set for £9m windfall as Ladbrokes pension scheme is wound up

GVC is primed to receive a lump-sum payment of £9m in excess plan benefits relating to Ladbrokes’ employee pension plan, EGR can exclusively reveal. The lump sum is due to be paid as scheme benefits wind up before being transferred from an internal pension scheme to external management by Rothesay Life. This forms what is known as a pension scheme buy-out policy, whereby a pension fund sponsor (such as a large company) pays a fixed amount in order 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. In an internal letter from Ladbrokes Coral Pension Trustees seen by EGR, trustees confirmed the buy-out plan and revealed that pension scheme wind-up proceedings began on 24 September. After paying all outstanding liabilities, including scheme benefits to members, the pension plan carries an excess of £9m. “The company’s support and funding for the plan, including the significant contributions it has made to the plan in recent years are the reasons for any assets remaining once benefits are secured for all members,” the letter states. “Therefore, the trustee has decided to exercise its power to return these excess assets to the company,” the letter adds. The status of the Coral employee pension plan, which is also managed by the trustees is unknown. Former Ladbrokes employees and scheme members have questioned the decision to pay the excess benefits to the company. One ex-employee, who wishes to remain anonymous, suggested GVC use the excess £9m to top up the existing plan benefits of Ladbrokes Coral employees. “The Trustees have not explained the options that are available for this cash,” they told EGR. “Why should it go to the company? We’ve contributed to the plan as regularly as clockwork, whereas the company has not always chosen to contribute at various points when it was entitled to do so.” The individual suggested GVC should look to establish a so-called hardship fund aimed at supporting employees affected by Covid-19 closures, instead of allocating the extra funding to business-related activities such as marketing. “They [GVC] should look to increase the pensions of the cleaners, the shop staff, the people at the greyhound tracks and those with lower pensions and all the people who work on lower wages who are feeling the pinch, rather than adding to GVC’s profits,” the former employee claimed. Under UK pension law, pension scheme members must be advised of the intention to refund excess pension scheme amounts to employers upon the transfer of any plan. Members can oppose such measures by writing to pension scheme trustees, which Ladbrokes Coral pension scheme members can do before 10 December. A number of current scheme members are planning to write to the scheme trustee to query the payment, EGR has confirmed. In a statement provided to EGR, the Ladbrokes Pension Trustees said: “The buy-out is due to take place in 2021 and from this time Rothesay Life will provide members with individual policies to secure future payments for members and the plan will then wind up.” “The trustee is communicating with members in relation to this process. “Ladbrokes’ support and funding for the plan, including the significant contributions made to the plan in recent years has made the buy-out possible and has meant that there will be surplus assets remaining once all the benefits have been secured for members. “With regard to this, the trustee took the view that it was appropriate for any funding from Ladbrokes not required to achieve the buy-out of members’ benefits in full to be returned to Ladbrokes,” the trustee added. Ladbrokes Coral parent company GVC Holdings declined to comment further on the pension scheme award after being contacted by EGR.