Defined BenefitMay 24 2019

Field asks Sir Philip Green to personally fund pensions

twitter-iconfacebook-iconlinkedin-iconmail-iconprint-icon
Search supported by
Field asks Sir Philip Green to personally fund pensions

The chairman of the Work and Pensions select committee wrote to the retailer's chairman, as the company plans a company voluntary arrangement which will see the closure of 23 of its 566 stores in the UK and Ireland, with the loss of 520 jobs.

Mr Field asked Sir Philip to replicate the funding he “personally provided” when a “similarly grim situation arose for BHS pension scheme members”.

He notes that Sir Philip's previous provision of funding was not until after the intervention of The Pension Regulator, and asked the billionaire to “offer a guarantee to Arcadia staff that you would do the same for them should the deficit reduction plan prove insufficient”.

For Arcadia’s CVA to be implemented, it is necessary that 75 per cent of creditors must vote in favour of the plan, with the Pension Protection Fund representing the pension scheme’s interests.

Oliver Morley, chief executive of the PPF, said: "We are now reviewing the relevant Arcadia CVA so that on June 5 we can vote in the best interest of the schemes and the PPF. We will support the Pensions Regulator to achieve this, and want to reassure scheme members that we are here to protect them at this concerning time."

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).

TPR has dismissed a proposal made by Arcadia to plug its defined benefit schemes deficit with an additional £100m, as it doesn’t consider the proposals “sufficient to ensure that members of the scheme are adequately protected”.

Mr Field also mentioned speculation that Sir Philip was considering putting the Arcadia schemes in a defined benefit consolidator.

He asked the chairman of Arcadia to give “a public commitment now” that this won’t happen unless the scheme is fully funded and a regulatory framework is in place.

DB consolidation has been on the government's agenda, with the Department for Work and Pensions publishing a consultation paper in December, which closed in February.

The consultation followed a DB white paper published in March 2018, in which the government revealed plans to promote consolidation in the DB pension market, in which two thirds of the 5,600 schemes have funding shortfalls.

Sir Philip’s former retailer BHS went into administration in 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 PPF.

maria.espadinha@ft.com

What do you think about the issues raised by this story? Email us on fa.letters@ft.com to let us know.