Arcadia schemes to enter PPF assessment shortly

Arcadia schemes to enter PPF assessment shortly
 Sir Philip Green, chairman of Arcadia Group

Arcadia’s defined benefit schemes are expected to enter Pension Protection Fund (PPF) assessment “shortly”, according to The Pensions Regulator.

In a letter to Stephen Timms, work and pensions committee chair, dated December 18, Charles Counsell, chief executive of TPR, explained that the Arcadia scheme’s entry into the assessment period was still subject to validation by the PPF.

During this assessment period, members will not be able to make transfers from the scheme.

The letter also set out how members will be protected and whether any assets will be transferred to the DB schemes.

According to TPR, the Arcadia assets will not be transferred directly to the schemes. However, the administrators will look to realise the value from those assets, and the Arcadia businesses in general, and will make payments to creditors, including the pension schemes, in due course. 

The timing of this will depend on how quickly the properties and businesses can be sold.

Mr Counsell said: “We endeavour to be open and transparent with our regulated community whenever we can, but in cases of communications about specific schemes, it is the role of the trustees to communicate directly with their members.”

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

In response, Mr Timms called on TPR to provide clarity on the status of the £385m package previously agreed by TPR, Arcadia and the group’s owner Lady Green.

In the latest letter, Mr Counsell said the regulator had worked very hard last year during the CVA negotiations to ensure a strong package for members of the two Arcadia DB schemes in the UK. 

He said: “Working alongside the trustees and the PPF, we agreed and secured an enhanced package of support for the Arcadia schemes, worth significantly more than they would have received if the CVA vote had not been successful.”

Under the terms of an agreement reached in 2019, Arcadia agreed to provide security for the schemes to the value of £210m - up from an initial offer of £185m - which included an additional £25m agreed with TPR.

Tina Green, Sir Philip’s wife, agreed to provide a voluntary contribution of £75m over three years to help close the funding deficit of the pension schemes, plus an additional £25m, making it a total of £100m.

FTAdviser reported in March this year that Lady Green’s payments would continue, while Arcadia’s will be deferred. In practice, instead of receiving £50m, the schemes will see a contribution of £25m.

Speaking about this deal, Mr Counsell said: “We were satisfied that the arrangements were the right ones for members and the PPF in challenging circumstances, and that they were equitable in the context of the wider CVA process with an ongoing employer seeking to implement a turnaround plan.”