The National Institute of Agricultural Botany (NIAB) Trust has become a statutory employer of the NIAB (1996) Pension Scheme following pressure from The Pensions Regulator (TPR).

After months of discussions and the issuing of a warning notice by TPR, the NIAB Trust agreed to share responsibility of the scheme with the NIAB, which was previously the sole statutory employer.

The NIAB and the NIAB Trust were originally part of one entity, which was a non-departmental public body associated with the then Ministry of Agriculture, Fisheries and Food.

The joint entity, also called the NIAB, was privatised in 1996 and split into two separate entities, the NIAB and the NIAB Trust, in 1998.

The separated NIAB was designated as the sole statutory employer of the pension scheme, while the NIAB Trust, a registered charity, was given responsibility for the institute’s remaining land, buildings and valuable assets.

The NIAB Trust’s objectives included providing support to the NIAB, including land, facilities, and financial support.

However, the separation of the land assets from liabilities, including the pension scheme, left the scheme “in a vulnerable position”, according to TPR.

Following the split, the NIAB had net assets of £3.7m, as at 31 March 2017, while the NIAB Trust had net assets of £50.5m at the same date.

This included assets that would previously have been available to meet pension scheme liabilities.

The scheme’s trustees attempted to secure financial support from the NIAB Trust but were unsuccessful, resulting in a failure to agree to the 2015 funding valuation as the trustees believe that the NIAB’s covenant alone could not support the scheme.

In June 2018, TPR began considering seeking a financial support directive (FSD) against the NIAB Trust, which would require financial support to be put in place for a scheme over and above that provided by the scheme’s statutory employer.

TPR informed the NIAB Trust they were considering an FSD and opened negotiations, aiming to secure support for the scheme without formally using its powers.

In September 2018, TPR issued a warning notice seeking an FSD while negotiations continued.

In December 2019, after “lengthy discussions” between the NIAB Trust, the trustees and the regulator, a settlement was agreed which saw the NIAB Trust become a statutory employer to the scheme.

This means that it now shares responsibility for the full scheme deficit with the NIAB.

TPR noted: “As the NIAB Trust is a charity, it must balance its charitable objectives with its other responsibilities. The flexibility of the settlement allows it to provide legally binding, long-term support to the scheme and its members.

“As part of the negotiations, the trustees have also agreed both the 2015 and 2018 valuations which see both the NIAB and the NIAB Trust taking joint responsibility for the deficit repair contributions due as part of the recovery plan.

“Thanks to the hard work of all the parties involved, the scheme now has two statutory employers and has greater access to the assets of the NIAB Trust for the benefit of its members.”

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