Defined benefit consolidator The Pension Superfund has taken an interest in acquiring the Arcadia pension schemes, now that the retailer’s restructuring plan has been approved.
Arcadia Group announced yesterday (June 12) that all seven of its company voluntary arrangements have been approved by the companies’ creditors, including its pension trustees, suppliers and landlords.
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.
But Lady Green - Sir Philip Green’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.
Following discussions with the Pension Protection Fund and The Pensions Regulator, the retailer also agreed to provide an extra £25m in securities, bringing the additional security up to £210m.
Luke Webster, chief executive of The Pension Superfund, said these numbers and the approach taken by the regulator had started to bring Arcadia into the scope of the DB consolidator.
He said: "Now that the CVAs have been approved by creditors, we stand by to assist the Arcadia pension scheme trustees to deliver scheme members into a safe harbour where we believe there could be a better outcome for all."
Arcadia 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).
The Pension Superfund was created in March 2018, but saw a reshuffle of its leadership team six months later, when CEO Alan Rubenstein, and one of its main investors, Warburg Pincus, announced their departure.
Since then the consolidator has reached an agreement on its first transaction.
Mr Webster explained that in the consolidator’s model "pensioners stand to receive a fair share of surplus returns alongside investors".
He said: "This is a significant potential benefit in addition to the improved security they will have obtained on transfer.
"Some think that the best support for any pension scheme is a trading employer. Given the challenges facing UK retailers, we might question whether that is always the case.
"We offer a very high level of security with generous compensation for the remaining risk. We believe many pensioners would be very happy with the outcomes we offer."
maria.espadinha@ft.com
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