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<p>The Pension Protection Fund is a statutory public corporation led by its Board
and accountable to Parliament through the Secretary of State for the Department for
Work and Pensions.</p><p> </p><p>The original decision in the Kodak case, which provided
savers with the potential to receive benefits above Pension Protection Fund levels,
was finely balanced and carefully assessed with the benefit of the due diligence carried
out for the trustees. Regulated Apportionment Arrangements, a restructuring mechanism
which allows a financially troubled employer to detach itself from its liabilities
in respect of a defined benefit scheme, are rare and The Pensions Regulator will only
agree to them if stringent criteria are met, with entry into the Pension Protection
Fund the expected outcome, and the Pension Protection Fund must not object to the
Regulated Apportionment Arrangements. The Pensions Regulator published a section 89
regulatory intervention report in November 2014 describing in detail the considerations
leading to the decision in this case.</p><p> </p><p>As a condition of approving the
successor Kodak pension scheme in 2014, a memorandum of understanding was put in place
giving The Pensions Regulator the power to closely monitor the progress of the scheme
and if necessary trigger its wind up. This has allowed The Pensions Regulator, with
the Pension Protection Fund, to remain actively involved in discussions about the
scheme’s future. Due to underperformance of the underlying business it was concluded
that the scheme would be unable to meet its long term funding requirements. Action
has therefore been taken to bring the scheme into a Pension Protection Fund assessment
period which commenced on the 25 March 2019.</p><p> </p><p>Specialist firms with extensive
Pension Protection Fund experience have been brought in to manage the administration
of the pension scheme and to oversee its efficient passage through the assessment
process.</p><p> </p><p>Whilst the Kodak case is a significant claim, the Pension Protection
Fund remains in a robust financial position. In its last reported accounts, the Pension
Protection Fund had a £6.7 billion reserve and is currently on track to reach its
funding objective. There has been no immediate impact on the Pension Protection Fund
Levy arising from this case. The Pension Protection Fund aims to collect £500m in
levy in 2019/20 which is £50m lower than it aimed to collect in 2018/19.</p><p> </p><p>The
Pensions Regulator aims to learn from every major pensions restructuring case and
has refined its approach to complex pension restructurings in light of the lessons
learned in the Kodak case and successive cases. A letter was sent on the 17<sup>th</sup>
October 2018 from Lesley Titcomb, the then Chief Executive Officer (CEO) of The Pensions
Regulator, addressed to the Chair of the Work and Pensions Select Committee, Rt Hon
Frank Field MP, summarising the lessons learnt in the Kodak case.</p>
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