Arcadia collapse sees 10,000 pensions head to PPF

Arcadia collapse sees 10,000 pensions head to PPF
 Sir Philip Green, chairman of Arcadia Group

The pensions industry and MPs have called on Sir Philip Green to plug the estimated £350m deficit facing the Arcadia DB scheme as the company has fallen into administration.

Sir Philip’s Arcadia Group, which includes high street brands Topshop, Burton and Dorothy Perkins, appointed administrators from Deloitte last night (November 30).

The administration raised concerns for the 10,000 members of Arcadia's pension scheme which will now be assessed for entry into the Pension Protection Fund (PPF).

But as the pension scheme has an estimated deficit of £350m, there is a risk that members who have not reached the scheme‘s normal retirement age will face a 10 per cent cut to their pensions.

Both the industry and MPs have called on Sir Philip to plug the shortfall.

In addition, Stephen Timms, chairman of the work and pensions committee has written to the Pensions Regulator (TPR) to stress the importance of “securing the interests of pension scheme members”.

The letter calls for clarity on the status of the £385m package previously agreed by TPR, Arcadia and the group’s owner Lady Green and also asks what is being done to protect Arcadia scheme members from pension scammers.

Mr Timms said: “There is unquestionably a moral case for the Green family to do the right thing and guarantee Arcadia’s hardworking staff what is rightfully theirs, whatever happens this Christmas. 

“But the Pensions Regulator must also ensure that it is doing everything in its power to fight the corner of the pension scheme members.”

He added: “This is a crucial moment for the regulator to show that it has learned the lessons of previous corporate collapses, such as those of BHS and British Steel. 

“While staff will be worried about possible job losses, the Pensions Regulator must take firm and decisive action to protect them from fraudsters.”

Kate Smith, head of pensions at Aegon, said this event could test the Pension Schemes Bill which gives new powers to TPR to tackle issues such as this.

She said: “Fierce negotiations still have to take place between the Arcadia Group, and the Pensions Regulator, with calls to Sir Philip Green to plug the £350m funding gap. 

“This could be the first real test of the Pensions Bill which, once it has been given Royal Assent, will give the Pensions Regulator new powers to intervene, if it’s not too late.” 

A PPF spokesperson said: “Insolvency events are a concerning time for employees and schemes members and we want to assure the members of Arcadia’s defined benefit pension schemes of our ongoing protection.

"The robust negotiations at the time of the CVA last year have ensured that both schemes are now in a better financial position.”

Hope for savers

Tom Selby, senior analyst at AJ Bell, said: “The Pension Protection Fund acts as a lifeboat for members of defined benefit schemes whose sponsor fails, paying at least 90 per cent of the value of pensions built up.