Defined Benefit  

MPs question regulator about Debenhams pensions

MPs question regulator about Debenhams pensions

The Work and Pensions select committee has questioned The Pensions Regulator about its involvement in Debenhams' ongoing refinancing discussions.

In a letter sent to Leslie Titcomb, TPR’s chief executive, on February 27 independent Labour MP Frank Field, chairman of the committee, asked for details on the watchdog’s involvement to date with Debenhams' pension schemes.

The retailer has two defined benefit pension funds, the Debenhams Executive Pension Plan and the Debenhams Retirement Scheme, which both closed to future accrual in 2006.

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While the former is fully funded, the latter is currently undergoing recovery action.

Mr Field questioned if the regulator had any involvement in the ongoing discussions about the refinancing of the business and other options to secure its future.

Debenhams announced today (March 11) that it is in advanced negotiations with its current lenders about borrowing an additional £150m.

TPR was in discussions about the potential impact of the high street retailer entering a restructuring plan with the trustees of its pension schemes in September.

According to its last actuarial valuation, concluded on 31 March 2017, the Debenhams Executive Pension Plan was fully funded on a technical provisions basis - which measures the extent of liabilities in relation to past service as they fall due.

The Debenhams Retirement Scheme had improved since the previous actuarial valuation but remained in deficit, the company stated in its 2017 annual report.

The value of the shortfall wasn’t disclosed, but the retailer agreed a recovery plan for this plan which was intended to restore the scheme to a fully funded position on an ongoing basis.

Under that agreement, Debenhams agreed to contribute £5m per year to the pension schemes for the period from September 2017 to March 31, 2022.

Several retailers had discussions with the watchdog and also the Pension Protection Fund (PPF) regarding their restructuring plans, including MothercareHouse of FraserCarpetright and Toys R Us – the latter entered PPF assessment after the company went bust.