Cluttons in talks with regulator over £43m pension deficit

The world’s oldest practicing firm of chartered surveyors, Cluttons, is in talks with the trustees of the firm’s final-salary pension scheme over how to deal with its increasing deficit. The company’s liability stood at £42.9m at the end of March and since then this figure has risen owing to the EU referendum result, the subsequent lowering of interest rates and the expectation that rates will stay lower for longer. The scale of the pension shortfall Cluttons is required to make up has increased over the past two years owing to low gilt yields and interest rates, combined with an increasing life expectancy of the scheme’s pensioners. Cluttons’ pension issue is one shared by some of the UK’s biggest companies, with BT, Tesco and British Airways also dealing with substantial deficits. Research by PwC shows UK companies face a £710bn pensions black hole. A negotiated settlement over Cluttons’ pension scheme is being considered but at present “the size of the deficit remains hugely significant in terms of the group and LLP balance sheets”, according to the company’s annual results for the year to 31 March 2016. Discussions also include the Pension Protection Fund, the Pensions Regulator and Cluttons’ adviser Deloitte. Cluttons brought in Deloitte last October and held discussions with Lambert Smith Hampton owner, Countrywide, about a sale of the business. The pension scheme figured prominently in those discussions, which Cluttons partners elected not to pursue. The scheme closed in 2006 but liabilities are expected to continue into the 2030s. A recovery plan for the scheme was put in place in 2013 between the company and the trustees. Once every three years a full revaluation of the scheme takes place, the last of which was in August last year. This has yet to be finalised, and a subsequent, fresh recovery plan yet to be agreed on the level of deficit repair contributions that have to be made by the company. Currently the firm pays monthly contributions plus a “ghost partner” share of profits into the scheme. Cluttons’ 2016 accounts were filed at Companies House this morning. Operationally, the 600-strong company is performing well and reported a £7.1m operating profit in its latest results. Cluttons is led by senior partner Steve Morgan, who took the reins in April, and James Gray who was appointed managing partner in August. Gray said that the liability could be worked out over the long-term and that the company was working towards a satisfactory resolution for all parties. “In as far as our conversations with the regulators and the Pension Protection Fund, we are working very hard and engaging the best advisers we can to deal with it in the most appropriate way for the pensioners and the business and our clients.” For a full interview with Steve Morgan and James Gray on their visions for Cluttons see this week’s Estates Gazette • To send feedback, e-mail david.hatcher@estatesgazette.com or tweet @hatcherdavid or @estatesgazette