Defined Benefit  

Arcadia pension plans slammed by MPs

Arcadia pension plans slammed by MPs

The Work and Pensions select committee has questioned the regulator and the Arcadia group pension schemes about Sir Philip Green’s (pictured) proposal to halve the deficit contributions the company makes to its final salary plans.

According to Sky News, the retailer and its advisers have proposed that Arcadia reduces its yearly £50m contributions to its defined benefit pension schemes to approximately £25m, as part of a financial restructuring that will entail the closure of dozens of stores.

This comes a mere two years after a £363m deal was reached with Sir Philip to rescue the pensions of 19,000 former BHS workers.

Article continues after advert

In a letter to Nicola Parish, The Pensions Regulator executive director of frontline regulation, dated April 8, independent Labour MP and committee chairman Frank Field questioned the watchdog's approach to considering Sir Philip's proposal.

Mr Field also wrote to Margaret Hannell, the pensions manager at Arcadia, questioning her about the trustees’ involvement and her views on the new deficit contributions proposal.

The ailing retailer has two final salary plans with a combined deficit in 2018 of £537m on technical provisions, or £727m on a buy-out basis (the amount needed for an insurer to take on the liabilities), according to figures provided by Ms Hannell.

Mr Field said: "Sir Philip was dragged to a costly out-of-court settlement with TPR, no more than he should have paid to his loyal employees’ pension scheme in the first place, no thanks to him and little to TPR.

"Even before the latest scandal over his treatment of colleagues and employees Sir Philip had proven himself no knight of British retail - quite the opposite.

"Does he really think he’s going to get away with his old tricks again? Run the business down, pocket whatever cash is left, stiff the pensioners and sail off on the Lionheart leaving employees, pension schemes and his long-suffering creditors in the lurch? Not if we have anything to do with it."

Sir Philip’s former retailer BHS went into administration in April 2016, leading to an investigation by TPR after workers’ pension funds were found to be at risk.

An independent pension scheme for 19,000 former BHS workers was set up after a £363m settlement was reached with Sir Philip.

The new scheme would pay members the same starting pension that they were originally promised by BHS, with greater ongoing benefits than they would have received from the Pension Protection Fund.

maria.espadinha@ft.com