Smiths News plc (“Smiths”) recently published preliminary result for the year ending 31 August 2025, reporting that it has spent a whopping £0.7 million in legal fees, simply responding to two requests for information from the Pensions Regulator (in October 2024 and June 2025).
The requests relate to the Smiths’ ownership of Tuffnells Parcels Express Limited (“Tuffnells”), the failed corporate sponsor of the Tuffnells Parcels Express Pension Scheme (the “Scheme”).
The Pensions Regulator has statutory powers to investigate the circumstances surrounding a scheme failure and to demand the provision of relevant documents from parties connected to, or like Smiths, previously connected to a scheme.
Smiths purchased Tuffnells in 2014 for an initial consideration of £113.4 million. In 2020, Smiths sold Tuffnells to Broad Oak Support Services, a turnaround investor, for about £15 million, before Tuffnells entered administration on 12 June 2023. On the face of those simple facts, it appears that Smiths made a poor investment and cannot reasonable be held responsible for Tuffnell’s failure or the Scheme’s current predicament and hence doesn’t deserve further punishment. However, that likely oversimplifies the position - the Pensions Regulator clearly believed it had good reason to dig deeper.
Tuffnells latest filed accounts before its insolvency, covering the year ending 31 December 2021, reported that the Scheme held assets of £11.7 million and that Tuffnells had been committed to contribute £0.5 million per annum to remove the funding deficit reported at the last formal actuarial valuation as at 1 April 2019.
The Pensions Regulator has told Smiths that the Scheme had an estimated s75 liability of £3.355 million, which represents the maximum penalty that the Pensions Regulator is likely to seek to impose.
Smiths report that “With support of legal advice, the Board maintains the view that the Company has acted reasonably throughout its time as parent of Tuffnells and notes that it was an overall net contributor of funding to Tuffnells during its period of ownership.”
Smiths will likely not find out what the Pensions Regulator thinks until 20 February 2026, the reported statutory deadline for issuing a Warning Notice, which will force the Pensions Regulator into revealing its hand.
Even if nothing further comes of the Pensions Regulator’s investigation, the mere fact that it examined Smiths’ role has already cost it £0.7 million, which is indicative of the costs and risks that a DB schemes can present in corporate transactions.
On the plus side, Smiths reported a £1.5 million refund for an overpayment of tax it paid on a refund of surplus it received from the News Section of the WH Smith Pension Trust during FY2022. Smiths was previously reported to have paid £5.1 million in tax, on a pre-tax surplus of £14.8 million. It is not clear to us from the publicly available data how or why this transpired to be too much, but it will no doubt have come as a welcome boost to Smiths.
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