The owner of the Daily Mirror today announced a controversial move to slash payments into its pension fund by £69 million over the next three years, even as the deficit soared.
Trinity Mirror had been due to make payments of £33 million a year to reduce the deficit, which has jumped by more than half to £230 million from £161 million a year ago.
Chief executive Sly Bailey will now pay in only £10 million a year between 2012 and 2014 and defer the remainder.
Ros Altmann, director-general of over-50s organisation Saga, said it was “certainly not normal” and warned the pension scheme’s security was, at least in the short term, reduced. Bailey rejected any suggestion the company was carrying out a “pensions raid”.
Pensions are a sensitive issue as the late Robert Maxwell, a previous Mirror proprietor, illegally took cash from a pension fund.
Bailey won the pension fund trustees’ approval as she wanted to reach a separate £110 million refinancing deal with its bank lenders that was also announced today. Trinity Mirror is saddled with net debt of £222 million on top of its pension deficit. The company has a stock-market value of only £100 million.
A source close to Trinity Mirror acknowledged it got a better refinancing deal by reducing its short-term pension payments.
Finance director Vijay Vaghela said: “Over time, Trinity Mirror will stand behind the deficit to make the payments.” The company and the fund trustees have also been in contact with the independent pensions regulator. It is thought that the regulator has not yet given a view.
Altmann said: “The basic message is that the security of the pension scheme is initially reduced. But the hope is that the company with its new borrowings can grow and thrive and ultimately secure a better long-term future.”
The pension changes came as Bailey reported a 38% slide in annual pre-tax profits to £74 million.
