The Pensions Regulator (TPR) has confirmed that £20m will be made available to the Wilko Pension Scheme from securities, with a further £4.5m expected to be made available from other recoveries.

Responding to recent inquries from the Work and Pensions Committee (WPC), the regulator confirmed that it is currently liaising with the scheme trustees and Wilko’s administrators to gather information and consider any potential application of its powers.

TPR also provided its latest estimate of the funding ratio and any deficit for the scheme, revealing that the deficit on a buyout basis was £70.2m (around 63 per cent) as of 12 July 2023, while the deficit on a section 179 basis was £19.8m (around 86 per cent) as at 1 May 2023.

TPR confirmed that it has ensured that £20m will be made available from securities and anticipate as further £4.5m to be made available from other recoveries.

The committee had previously asked the regulator whether it could estimate the impact of the liability-driven investment (LDI) issues in autumn 2022 on both the schemes’ funding ratio and the value of assets held since Q4 2022, given that the levels of hedging decreased between Q3 and Q4 of 2022.

In its response, TPR confirmed that it has received and reviewed performance reports from the trustee, including the trustee’s investment adviser’s assessment for the attribution of funding changes during these periods.

This suggested that the decrease in hedging combined with the market movements since Q4 2022 is likely to be a key contributor to the change in funding level.

However, the regulator stressed that these attributions require careful interpretation, clarifying that it is unable to suggest an estimation of what the funding levels could be between Q2 2022-Q2 2023 had the scheme not been using LDI.

Representatives from the Pension Protection Fund (PPF) have since also said that it is unlikely that it would be able to pinpoint how much of the loss was as a result of the “fire sale problems around LDI”.

Instead, representatives for the lifeboat noted that the overall funding level will depend on the movements seen in liability values during this period, suggesting that if the surplus as a whole has improved, any losses would "almost entirely be netted out”.

More broadly, the regulator's response to the committee also confirmed that it is currently working with the Department for Work and Pensions (DWP) on the notifiable events regime, acknowledging that “it remains a concern that TPR is not always notified of such acts”.

“The six-year limit on acts which engage our contribution notice (CN) power was set by Parliament as a reasonable period for TPR to respond to corporate actions that were detrimental. TPR engages with trustees and sponsoring employers on a variety of corporate activity which could affect pension schemes,” it stated.

“The Pension Schemes Act 2021 made provision for strengthening the notifiable events regime and has introduced a new fine for not notifying us. We are supporting DWP in developing the underlying regulations for those changes.”

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