The Mirror group pension scandal, which rocked Fleet Street some 25 years ago, is back in the news.
I remember it well. I was present as a Mirror Group executive when a late night meeting at the HQ of Mirror group lawyers Travers Smith and Braithwaite in London halted a proposed court action to recover £425m lent to a desperate Robert Maxwell to shore up the then troubled Mirror company.
The tycoon had died just over a month earlier when, alone on a cruise, he vanished from his yacht near Tenerife. His naked body was found in the ocean.
The Mirror’s employees faced the devastating prospect of a future with no company pension.
Then after negotiations came the rescue, unveiled in the London offices of the lawyers, a short distance from the company’s old HQ at Holborn Circus.
With representatives of the major banks who had lent Maxwell the money in nearby offices, instead of a scheduled court action the next day, the banks were to return the pension fund shares Maxwell had put up as collateral.
It was a major step on the road to restoring the pension funds which operate to this very day under the jurisdiction of Trinity Mirror, the vastly enlarged newspaper company which now controls the Mirror as well as countless other newspapers the length of Britain.
However reports in the past week have highlighted new concerns over a decision by Trinity Mirror to buy back shares from shareholders instead of using the cash to reduce the still gigantic pension fund deficit.
Tom Brown, deputy chairman of the Association of Mirror pensioners, writing on the pensioners' website sets out the story, as featured in two articles in News UK's the Times.
Brown reports that MP Frank Field, known as a pensions watchdog, has suggested the Pensions Regulator should block Trinity Mirrorʼs move to spend millions of pounds on a share buy-back and instead spend the money on reducing its pensions shortfall.
Fieldʼs stance has been supported by other experts.
They also criticise the company for distributing cash to shareholders, saying the money should be spent on reducing the giant pension-fund deficit.
Mr Field, chairman of the Commons Select Committee on Work and Pensions, was quoted in the Times as saying: “Here is an obvious case for the Pensions Regulator to act when the company is worth less than the deficit and yet is embarking on a £10m share buy-back. Any spare money should be going towards reducing that deficit.”
But some pension fund members feel the the reports do not reflect the whole story. The limited buy-back - tiny compared to the original black hole - could have the benefit of increasing the company’s share price.
Field also challenged the agreement between the pension fund trustees and the company for a recovery plan allowing Trinity Mirror 13 years to close the deficit gap as “far too long a period in which to balance the books”. He added that this was another aspect which should be investigated by the Pensions Regulator.
Since embarking on its £10m buy-back programme Trinity Mirror has spent £2.3m, regularly reporting the purchase of small parcels of shares which, on 6 January, amounted to 2.5 million ordinary shares of the total 280 million ordinary shares in issue.
Among other experts questioning the companyʼs strategy, former pensions minister Baroness Altmann was quoted: “Trinity Mirror is one of those companies with a massive pension scheme and a rising deficit. Itʼs hard to see how a share buy-back squares with this situation.”
Lady Altmann suggested that while conventional dividends were acceptable to reward shareholders, share buy-backs were more questionable.
Independent pensions specialist John Ralfe pointed out that in 2012 the company cut a planned £100m deficit contribution to £30m to repay other debts, in effect putting unsecured bondholders ahead of pension fund members.
He added: “It cannot be right for Trinity Mirror to be giving extra cash to shareholders when there is a huge hole in its pension scheme, especially as it reduced pension payments by £70m as recently as 2012. If the law is not up to the job of preventing this, parliament should pass new laws.”
In reply, Trinity Mirror said it had agreed to pay an extra £7.5m contribution to its schemes when opting for the buy-back.
A spokesman said: “We fully consulted the pension fund trustees and the regulator was notified. We remain committed to addressing our pension scheme deficits and believe we strike the right balance between payments to the pension schemes and returns to shareholders whilst maintaining headroom for investment.”
The 2012 cut in contributions had been approved by trustees.
AMP has asked independent trustee chairman Joanna Matthews for her reaction to the opinions expressed in the Times, and will report her response in due course.
Noel Young is a former editor of Sunday Mail in Glasgow and group managing editor of Daily Record and Sunday Mail. Now Boston-based US correspondent for UK newspapers including Daily Mail, Mail on Sunday and Sunday Post.