Mercury Provident Pension Scheme (MPSS), instigated by Mercury Provident (an Anthroposophical bank) and launched in partnership with Provident Life back in the early 1990’s, has a £4.7 million fund deficit and has closed its doors to new participants. Update March 2019: the defecit has now been formally confirmed to be £20 million, far far more than had been expected.
A pension scheme deficit is hardly blogworthy news these days but participating Anthroposophical employers in this pension scheme are liable for the pension scheme’s deficit. A majority of the UK’s Steiner (i.e. Anthroposophical) schools and several other Anthroposophical ’initiatives’ are affected and, generally speaking, the bigger the employer the more money it will have to find to finance its share of the
£4.7 £20 million deficit.
One of the schools affected is Elmfield Rudolf Steiner School, a medium sized Anthroposophical school based in Stroud, Gloucestershire. According to its 2008 accounts Elmfield’s share of the deficit is a whopping £421,000. Another Anthroposophical school of somewhat larger size, Rudolf Steiner School Kings Langsley, reports in 2008 accounts the same share of the deficit. A smaller Anthroposophical school affected is Nottingham based Iona School Association and its share of the deficit, reported in 2008 accounts, is £120,000.
Michael Hall School is another Anthroposophical school affected. No stranger to financial calamity, only a few years ago the school had been ripped off to the tune of £150,000 by its own bursar. Its share of the pension fund deficit is not stated in its 2008 accounts but it does report on the details of a 10 year payment plan to eliminate the deficit.
All of the above mentioned Anthroposophical schools report repayment plans to eliminate their own portion of the pension fund’s deficit. The plans, agreed to by the Pensions Regulator, spread repayments over 10 to 20 years so as to reduce exposure to financial risk. Not that the schools could likely afford one-off payments to sort out the pension deficit – Iona School’s share of the deficit, for example, represents about a third of its total income in an average year, a huge amount to find coming as it does ‘out of the blue’.
As to how many Anthroposophical schools and organisations are affected, there’s some confusion within the Anthroposophical camp. On the one hand Michael Hall’s 2008 accounts report:
“Michael Hall School participates in the Mercury Provident Pension Scheme, which is a defined benefit pension scheme whose membership consists of 16 Steiner schools. The most recent actuarial valuation of the scheme took place at 31 March 2007 and showed a deficit of £4.7m.”
Whereas Elmfield Rudolf Steiner School’s accounts for the same year state:
“In April major problems with Mercury Provident Pension Scheme were announced. This scheme is shared with 16 other employers, largely Waldorf schools and anthroposophical initiatives.”
So, it could be 16 Anthroposophical schools and only schools that are affected but then again it might not. No confusion on Elmfield’s part, though, as to where to lay the blame for being lumbered with the equivalent of an unexpected and sizeable liability – Elmfield’s 2008 accounts go on to say:
“…the actuarial report issued in April 2008 revealed a £4.7 million deficit as at 31 March 2007: the share apportioned to Elmfield was £421,326 (9%). The scale of the deficit was unexpected, given the assurances provided by MPPS directors shortly before.”
The MPSS directors were, then, downplaying the scale of the pension scheme’s financial problems shortly before March 2007. Presumably the MPSS directors gave similar assurances back in 2004/2005 when the actuaries’ valuation first showed the scheme to be in deficit. Michael Hall School reported in its 2005 end of year accounts:
“The charity operates a defined benefit pension scheme. Contributions are paid to a multi-employer group scheme established by the Steiner Schools Fellowship with Mercury Provident . The charity is unable to identify its share of the underlying assets and liabilities of the scheme. At the latest actuarial valuation on ~1 March 2004, the fund showed a deficit.”
The Fellowship mentioned in the above is a previous working name for Steiner Waldorf Schools Fellowship (SWSF), the national body representing Steiner (i.e. Anthroposophical education) in the UK. Regular blog readers will know of SWSF from previous blog posts (this one’s a corker, for example)
Along with the schools mentioned so far, SWSF was a participant in the multi-employer group pension scheme it established, MPSS presumably being the overarching pension scheme provider. SWSF accounts for 2008 have this to say regarding the pension fund deficit:
“The latest triennial actuarial valuation as at 31 March 2007 indicates a scheme deficit of £4.87 million…Due to deteriorating economic conditions it is known that the scheme deficit will have increased since the last valuation and the scheme trustees and participating employers have been discussing the best way forward. It is more than likely that the scheme will be closed to further benefit accrual, and that future contribution levels will be calculated so as to eliminate the scheme deficit over an agreed period. …The charity’s share of the deficit is estimated to be £71,000.”
OK, so SWSF’s share of the £4.7 million deficit is £71,000 and the total deficit is expected to increase over at least the short term. This does raise the question as to whether or not the Anthroposophical schools already mentioned will be able to cope financially should the pension deficit increase significantly. Elmfield’s 2008 accounts contain a frank recognition of this, saying of their involvement within the pension scheme
“It is clear that this scheme will nevertheless remain a risk to the School for some time.”
As mentioned in a previous blog post, several Anthroposophical ‘initiatives’ closed down in September 2009 and more closures were anticipated. According to this article (it’s a Google translation) Emerson College is closing down and I have had it confirmed by Emerson that the college is closing. A prestigious Anthroposophical college, Emerson had been struggling financially for years but not even new leadership, financial cuts, redundancies and so on failed to turn the finances of the college around. (update January 2013: the college did close and has since reopened offering a slimline version of its previously offered courses)
An article on the old Emerson College website dating from 2009 (no longer available January 2013) describes a bleak scenario citing a ‘pension fund deficit’ as one of many issues being in need of urgent address. Emerson’s 2005 accounts state the pension it belongs to as being the MPSS and in 2008 accounts the scheme was described as ‘a collectîve policy scheme for Steiner Schools’ employees’. In the same 2008 accounts Emerson’s share of what must be taken to be the MPPS deficit was reported to be £464,000 and arrangements for payment of the deficit over a ten year period were also reported.
Whatever the reasons for Emerson’s closure, the MPPS deficit – one of many issues in need of urgent address – surely played a part in Emerson’s eventual demise. The volatility of the MPSS deficit is now putting at least some of the remaining participants at risk – any further news regarding ‘mercury poisoning’ will be posted here on the blog.