The Pensions Regulator has reached a £255m settlement after taking anti-avoidance action against one of the world’s largest manufacturers and distributors of sewing threads.

The result of the Coats Group case will help to safeguard the benefits of approximately 24,000 pension scheme members, officials said today.

TPR issued Warning Notices over three defined benefit schemes sponsored by companies within the Coats corporate group in 2013-14.

These set out the case for exercising its Financial Support Direction power in relation

The main points of the agreed proposal were:

• Upfront payments totalling £255.5 million into the two schemes (inclusive of the agreed Recovery Plan contributions paid to the BHPS since 1 January 2016). The allocation of these funds are to ensure the two schemes are left in a similar funding position.

• A change in the statutory employer for the two schemes to Coats Limited, representing an improvement in the covenant support for the schemes.

• A full guarantee from Coats of the liabilities of the two schemes.

Nicola Parish, executive director of frontline regulation, said: “This is a substantial settlement of our FSD case where neither the employers nor the targets were insolvent. It shows we can and will use our existing powers against a solvent employer if that is the right thing to do.

“This case is a great example of how even after warning notices have been served, TPR, the company and the trustees can work together to achieve a good outcome for members without the need to formally enforce our powers through the Determinations Panel.”

She said: “We will continue to take a commercially-minded and pragmatic approach when pursuing the use of our powers to achieve good outcomes for scheme members.

“In this case, the settlement will substantially improve the funding of the two schemes and also strengthen the employer covenant supporting those schemes.”