Pensions Regulator  

TPR under pressure to show teeth after corporate failures

TPR under pressure to show teeth after corporate failures

The Pensions Regulator will be under pressure by the industry to ‘show its teeth’ when dealing with the recent Arcadia failure and ensuring the best outcome for members, Royal London has warned.

TPR must show it has learnt from the BHS debacle when it comes to handling Arcadia’s pension fund issues, according to Helen Morrissey, pension specialist at Royal London.

Ms Morrissey said: “There have been calls on Arcadia chairman Sir Philip Green to make good the deficit and the Pensions Regulator will be under pressure to show its teeth especially after the criticism it faced when it last faced off with Green over his responsibilities to plug the pension deficit of the failed BHS chain back in 2016.”

Previously, Stephen Timms, chairman of the work and pensions committee, stated that TPR must ensure it is doing “everything in its power” to fight the corner of the pension scheme members.

He said: “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.”

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

The administration raised concerns for the 10,000 members of Arcadia's pension schemes, which have an estimated deficit of £350m, and will now be assessed for entry into the Pension Protection Fund.

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.

In a similar situation, BHS went into administration in April 2016, a year after businessman Dominic Chappell bought it from Sir Philip for £1, leaving the pension schemes in jeopardy. 

In 2017 a £363m settlement with Sir Philip was reached to fund a new independent pension scheme for 19,000 former BHS workers and in January, Chappell was ordered to pay £9.5m into the schemes.

Following the BHS saga, the Pension Schemes Bill, which is currently making its way through parliament, contains new powers for TPR so it can tackle employers who do not adhere to their pension responsibilities.

Ms Morrissey said in the coming years these powers could be called upon more as more businesses seem set to go under.

She said: “As coronavirus continues to wreak havoc on the high street we could see these powers called upon more often in future.”