Guinness Peat Group (GPG) has received warning notices from the UK Pensions Regulator (TPR) relating to potential underfunding of Brunel Holdings Pension Scheme and Staveley Industries Retirement Benefits Scheme, which GPG sponsors.

The warning letters – anticipated by GPG last November – set out the TPR case team’s view that it may be reasonable for the regulator’s determinations panel to issue a financial support direction (FSD) against specified targets, namely GPG and GPG (UK) Holdings in respect of the Brunel scheme, and against GPG, GPG (UK) Holdings, Staveley Services and Staveley Industries in respect of the Staveley scheme.

An FSD is a direction requiring financial support to be put in place for a pension scheme.

Though this does not necessarily mean a cash contribution, it would affect GPG’s plans to return surplus capital to shareholders.

The strategic investment holdings group, which is listed in the UK, New Zealand and Australia and includes textile manufacturer Coats, has sold off its portfolio of global investments over recent years, raising around £700m (€834m).

Half of this amount has already been paid out, through cash payments and share buybacks.

Chris Healy, company secretary at GPG, said: “It is too early to be certain that any FSDs will ultimately be issued or of the quantum of any required support for the schemes.

“Whether it is reasonable to issue an FSD will be independently considered by the determinations panel of TPR and, if an FSD is issued by the determinations panel, the matter may be fully reconsidered by the upper tribunal.”

The GPG board is now reviewing the warning notices with its advisers. The targets will have the opportunity to make written submissions to TPR so the case team may consider whether to proceed with its submission that the determinations panel issue FSDs.

Any hearing before the determinations panel is unlikely to take place earlier than the second half of this year.

In the interim, GPG continues to engage constructively with the trustees of the schemes, said Healy.

Meanwhile, TPR said it would not be in a position to conclude its investigation and decide whether to issue a warning notice in relation to the Coats Pension Plan before the end of 2013, but would be looking to do so as soon as practicable.

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