A strange question but one that actually turns out to be true.
Dairy Crest announced this week that they were plugging a hole in their pension scheme using a warehouse full of cheese, £60m of cheese to be precise.
It may sound surreal but it actually makes a lot of sense, and asks the question of what other companies could look at plugging their pension schemes with, and what you could look at doing with your pension.
Charles Cowling, managing director at JLT Pension Capital Strategies said in the Guardian, “If a company has valuable assets that are not pledged to a bank, why not pledge them to their pension scheme if that means they don’t have to put their hands in their pockets to put large amounts of cash into their retirement scheme”
The case here was that Dairy Crest had a warehouse of circa £150m worth of cheese. The company makes more cheese and holds a stock of this level pretty much all the time. Add to this a reasonable assumption that there will always be a demand for cheese, and it starts to make sense that providing your pension with a charge over a strong asset is a sensible thing to do.
What it means is that should the company go bust (and there are no signs it will) then the pension could sell the cheese and replace it in the pension with the cash from the sale.
What About My Pension?
It is unlikely that many SME’s will have huge pension deficits, if at all, however it does suddenly make pensions a little more interesting.
We do not advise on pensions, but can put you in touch with a FSA regulated advisor if you wish.
However, we do get involved with directors and business owners who have pension funds and want to use those funds for their business. It is worth asking that if you can take a charge over cheese then your company may have assets which your pension could purchase, hence releasing cash to your business.
Reference – Guardian – link included