Arcadia DB schemes could escape PPF lifeboat

Arcadia’s defined benefit (DB) pension schemes could manage to avoid falling under the remit of the Pension Protection Fund (PPF) after trustees managed to accumulate £173m from the sale of assets.

Sources cited by The Guardian stated that it was “likely” that the scheme would manage to remain independent from the PPF following the sales, meaning that members who have not yet reached retirement age could receive more of their pensions than the 90 per cent provided by the lifeboat fund.

Even so, the schemes currently remain under PPF assessment.

The additional funds are thought to have stemmed from property sales, including Topshop’s flagship London store, the £330m purchase of the Topshop, Topman and Miss Selfridge brands by ASOS, and the £25m purchase of Dorothy Perkins, Burton and Wallis by Boohoo.

A letter sent to members of the scheme indicated that further sums could be realised for the scheme, though it is unlikely that these would fully account for the scheme’s deficit, according to The Sunday Telegraph.

The scheme’s deficit is still being assessed by trustees but is thought to stand at around £300m, even after the £50m paid into it by the Green family in December.

A spokesman for Arcadia’s DB schemes said: “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 £173m as a result of the security package agreed under the terms of the 2019 CVA.

"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.”

The company has also confirmed that it will cease contributing to the pension scheme from 31 March 2021, with trustees commenting in a letter to members that they “await confirmation as to whether another party will take over responsibility for the scheme but, in all honesty, this seems unlikely”.

The letter continued: “The outcome is likely to be that the trustees will have no option but to wind-up the scheme and to secure annuities for those currently being paid their pensions and to provide transfer values for all other members.

"We will have a much clearer picture after 31 March 2021 and will update members again then.”

The collapse of Arcadia brought about the latest entry in the saga of the group’s DB pension schemes, which had already required a £385m injection of capital from Arcadia and the Green family to remain on top of its deficit back in 2019.

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