Defined Benefit  

Debenhams pensions enter lifeboat test

Debenhams pensions enter lifeboat test

The Debenhams defined benefit pension schemes have entered an assessment period at the Pension Protection Fund, as the retailer announced the details of two proposed company voluntary arrangements.

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.

While the former is fully funded, the latter is currently undergoing recovery action. During the assessment period, the PPF will determine if the scheme has sufficient assets to meet its protected liabilities, or if it will need to enter the pensions lifeboat.

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It is hoped the schemes will not have to enter the PPF if the agreed voluntary arrangement is approved.

A PPF spokesperson confirmed that the schemes have entered the assessment period.

She said: "In the event the CVA is passed, we would expect the schemes to then exit PPF assessment.

"We have been working closely with The Pensions Regulator, the company and trustees of the scheme to ensure the best outcome for members and PPF levy payers. Members can be reassured that the PPF is there to protect them if needed."

The CVAs, which are designed to "keep Debenhams on a stable financial footing and ensure the future of the company", will include the closure of 50 stores.

The announcement, made on Friday (April 26), followed a recent deal where financial creditors provided £200m of fresh liquidity and committed to equitise £100m of debt.

A spokesperson for the Debenhams Pension Schemes trustees said the CVA does not seek to compromise or reduce the employer’s obligations to the schemes. 

He said: "The trustees hope that the CVA will be successful and will facilitate a sustainable solution for Debenhams, which will ensure that the schemes are supported in the long term.

"The trustees have worked with our specialist advisers throughout this process, to ensure that members’ interests are taken into account, and we have consulted closely with TPR and the PPF at every stage.

"We are in the process of writing to all members with detailed information about the CVA process, and we will continue to keep them informed."

maria.espadinha@ft.com