Sir Philip Green (pictured), Arcadia’s chairman, has offered a £185m additional security for the ailing retailer's pension schemes.
According to media reports, this sum is made up of certain property assets, which could be sold to fund the pension scheme in a crisis.
Sir Philip’s proposal, which was made last week, came to light after independent Labour MP Frank Field, chairman of the Work and Pensions select committee, asked him to personally fund Arcadia's pension schemes in case of a shortfall.
Mr Field asked Sir Philip to replicate the funding he personally provided when a "similarly grim situation arose for BHS pension scheme members".
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).
FTAdviser understands that this additional security is a separate proposal from the company voluntary arrangement Arcadia is proposing, which will see the closure of 23 of its 566 stores in the UK and Ireland, with the loss of 520 jobs.
As part of the CVA, the retailer is proposing to decrease the annual contributions made to the schemes from £50m to £25m, for three years, "with security over certain assets being granted in order to provide support to the schemes".
Tina Green - Sir Philip’s wife and the ultimate owner of Arcadia — has offered to bridge the shortfall with funding of £25m per year for the next three years, plus an additional £25m contribution, resulting in total payments of £100m.
However, The Pensions Regulator has dismissed this proposal, as it doesn’t consider it to be "sufficient to ensure that members of the scheme are adequately protected".
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.
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 pays 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
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