House of Fraser's pension schemes are expected to enter the Pension Protection Fund assessment period after the firm was purchased by Sports Direct owner, Mike Ashley, for £90m.
The pensions lifeboat confirmed that it is awaiting “formal confirmation” from the firm’s pension schemes, which will now be overseen by professional trustees from Dalriada.
The group’s two pensions schemes, Bettie & Jenners Pension Scheme (BJRB) and the House of Fraser Pension Scheme have around 1,000 and 5,000 members respectively.
A PPF spokesperson said: “We are aware of the insolvency of House of Fraser and that the assets of the business have been sold. We anticipate to receive formal confirmation that the pension scheme has entered PPF assessment shortly. Members can be assured that the PPF is there to protect them.”
Members of pension schemes that fall into the lifeboat normally take a 10 per cent haircut on the value of their pension pot in order to ensure they continue to receive some sort of pension benefit.
According to the retailers latest figures, the two schemes have a total surplus of £96.6m on an IAS 19 accounting basis.
A Dalriada spokesperson said: "It is expected that the House of Fraser Beatties & Jenners Pension Scheme will enter into a PPF assessment period. As a minimum, members will receive PPF compensation levels.
"It is possible that the scheme could buy-out benefits at a higher level than the PPF compensation levels but the detail would need to be worked through during the PPF assessment period.
"The trustee is taking advice from its professional advisers and will be sending a detailed communication to members to provide further information as soon as possible."
House of Fraser filed a Company Voluntary Arrangement (CVA) in the court on 6 June 2018 and according to the firm, the trustee of the BJRB scheme voted for the proposals.
Prior to the investment, a TPR spokesperson said it is continuing its discussions with the company and the trustee of the pension scheme about the situation, and it is “monitoring developments closely”.
“We are disappointed to learn that the proposed investment is not proceeding and are in contact with the trustees, company and PPF to understand the implications of this for the scheme.”