Defined Benefit  

Arcadia schemes could have enough assets to survive outside PPF

Arcadia schemes could have enough assets to survive outside PPF

Arcadia pension scheme members could receive a greater portion of their savings after a string of property and infrastructure sales raised enough capital to pull them out of the Pension Protection Fund.

The schemes’ trustees said they had realised £173m from the sale of assets since the company filed for administration in November last year, according to the Guardian.

In line with an agreement struck between the family of Sir Philip Green, the Arcadia trustees and the Pensions Regulator, the retailer’s two defined benefit schemes were given security over £210m of assets, including proceeds from the sale of Topshop to online retailer Asos, agreed by administrators this month.

The Arcadia schemes were thought at one stage to have a deficit as high as £350m and Green had long been under pressure to make good his promises to the 10,000 members.

Besides the sale of its Topshop brand and several items of real estate, Green’s wife Tina Green agreed to pay a voluntary contribution in instalments totalling £100m to reduce the deficit.

According to a report in December, the final £50m, which was due in September this year, was brought forward.

Though the sales and the contributions from the Green family are unlikely to fully wipe out the deficit, the Guardian’s report noted it should nevertheless be sufficient to keep the schemes out of the PPF.

This would leave open the prospect of an insurer or a consolidator stepping in that could guarantee members receive more of their savings.

Under PPF rules members who have not reached retirement age have their benefits cut to 90 per cent at the pensions lifeboat.

The PPF did not want to comment on schemes currently in assessment period.

A spokesperson for the Arcadia schemes said: “As a result of Arcadia’s appointment of administrators, the Arcadia Group Pension Scheme and the Arcadia Group Senior Executives Pension Scheme are now in PPF assessment.”

The purpose of this assessment is to determine whether the schemes have sufficient assets and liabilities to secure benefits in excess of those guaranteed by the PPF, the spokesperson said.

They added: “Based on initial calculations, the trustees are optimistic that they will be able to secure benefits at above PPF levels, and therefore the schemes should not need to remain in PPF assessment in the long term.”

The schemes have already received the £173m as a result of the security package agreed in 2019, the spokesperson continued, and this sum “will be augmented by the additional payments the trustees expect to receive under the administration process, which will further increase the schemes’ likelihood of being able to secure benefits for members in excess of PPF compensation levels outside the PPF”.

While the next step remains unclear, FTAdviser's sister publication Pensions Expert reported in December that talks were under way between the trustees and The Pension Superfund that could result in the schemes being absorbed by the consolidator.