Company set to buy McColl’s asked to take over staff pensions

Person carrying a McColl’s branded bag

Staff at the McColl’s convenience store chain must have their pensions protected after the company changes hands, pension trustees say.

EG Group, founded by billionaire brothers Mohsin and Zuber Issa, is expected to take over McColl’s on Monday.

However, the insolvency process can be derailed at the last minute.

Supermarket chain Morrisons has renewed its offer for the chain, according to Sky News.

Morrisons, which already works in partnership with McColl’s, saw its initial offer to take over the chain rejected on Friday. This triggered the insolvency proceedings, which are due to take place in court on Monday morning.

However, Sky News suggests the stage could be set for a last-minute bidding war for control of the channel following Morrisons’ new bid.

Both McColl’s and Morrisons declined to comment. But that could leave the owners of two of the UK’s biggest grocers fighting over the struggling business.

While the question of McColl’s ownership remains open, concerns have been raised about the future of its defined benefit pension plans.

Morrisons said his initial offer to take over McColl’s on Friday would have fully protected his retirees.

But the trustees fear that the insolvency process, if it were to go ahead, could lead to the elimination of pension commitments.

Trustrees wrote to the Issa brothers on Saturday expressing their concerns and urging them to “do the decent thing” by honoring the chain’s pension commitments.

They also called on Business Secretary Kwasi Kwarteng to intervene.

The pension plans in question were relatively small and maintaining them would be “clearly manageable for the current business, or whoever acquires it,” the administrators said.

However, scrapping the plans would represent “a serious breach of pension promises made to staff who have served the company loyally for many years,” the directors wrote.

McColl’s employs about 16,000 people in the chain of 1,100 convenience stores, but only about 2,000 fall under the two defined benefit pension plans that are at risk.

The convenience store industry as a whole has done relatively well during the pandemic as people shopped closer to home.

However, McColl’s ran into difficulties as it tried to update the range of food products it sold, a process made more difficult by Covid-related supply chain issues.

EG Group already owns thousands of service stations, including forecourt stores and other convenience stores in the UK, Ireland, Europe, Australia and the US and is expected to retain McColl sites and staff .

However, usually after such an insolvency, the new owners do not take on pension liabilities.

The directors said that since the EG Group claims to be a “good corporate citizen”, they should consider taking responsibility for the projects.

If the new owners abandon the pension plans, it will fall to the industry-funded Pension Protection Fund (PFF) to ensure members are compensated.

The PFF said that if the schemes were transferred to them, members who had reached their scheme’s normal retirement age would still receive the same amount of compensation as the pension they were receiving from their scheme at the time of transfer. insolvency. Members who had not yet received their pension would receive 90% of what they could have expected.

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