Pensions Regulator highlights regulatory action leading to scheme rescue for underfunded DB scheme

The Pensions Regulator published a regulatory intervention report, on August 26, 2025, on its involvement in the Edinburgh Woollen Mills Ltd Retirement Benefits Scheme, a DB pension scheme for the employees of Edinburgh Woollen Mills Ltd (EWM). EWM collapsed during the COVID-19 pandemic and administrators were appointed in November 2020. The scheme was underfunded and entered a PPF assessment period.

The Regulator was concerned about the employer’s rapid insolvency following a history of profitability. It issued several statutory notices requiring financial information to be provided about EWM and its wider group. Subsequently disclosed details about corporate transactions prior to the administration included intra-group loans and large dividend payments to EWM's owner. 

EWM was acquired by Purepay Retail Ltd from administration in December 2020. Following negotiations between Purepay, the trustees, the Regulator and the PPF, a scheme rescue was ultimately agreed that took effect in December 2024. The Regulator’s potential use of its anti-avoidance powers was therefore avoided.

Under the terms of the rescue deal:

• Purepay became the scheme's statutory employer through a scheme apportionment arrangement and paid a lump sum contribution of £7 million to the scheme.
• The scheme left the PPF assessment period.
• A recovery plan period ending in March 2028 was agreed for the scheme's latest triennial valuation, with the technical provisions set at prudent levels.
• Certain covenant protections were put in place on an ongoing and insolvency basis. 

According to the Regulator, the scheme is now funded above PPF funding level and is expected to achieve full funding on a low dependency basis within three to four years.

The Regulator welcomed the "positive outcome" for scheme members, noting that it is vital that sponsoring employers keep scheme trustees fully up to date about their financial position and prospects, particularly when facing financial distress.