Arcadia suspends monthly DRCs amid coronavirus crisis

Arcadia Group intends to suspend monthly contributions to its pension scheme in an effort to retain cash during the coronavirus crisis.

It is understood that the group, which includes high street retail brands such as TopShop, Dorothy Perkins and Burton, will defer the £2m per month payments for at least three months.

On Friday (27 March), The Pensions Regulator (TPR) announced that it would ease regulatory action on employers that suspend deficit repair contributions (DRCs) for up to three months as part of its updated guidance on COVID-19.

Arcadia employs around 18,000 people in the UK and suspended rent payments to landlords earlier this month amid the forced closure of non-essential retailers.

Business, Energy and Industrial Strategy Select Committee chair, Rachel Reeves, told The Guardian businesses “will need to answer for their decisions during this pandemic" and warned that the situation should not be used as an "excuse" to lessen employees' pension provision.

The group’s owner Lady Tina Green, wife of chairman Sir Philip Green, will continue to pay £25m into the group’s pension scheme per year, as per the agreement with TPR.

Arcadia’s pension scheme was saved in June 2019 after it reached an agreement with trustees, TPR and the Pension Protection Fund to cut contributions from £50m to £25m for three years while Lady Green provided £100m.

The deal had its critics, with former Work and Pensions Select Committee chair, Frank Field, claiming that it was “increasingly unlikely” to succeed in a letter to TPR from September last year, while he also urged the regulator to look into securing the long term security of the scheme.

The news of Arcadia’s intention to halt contributions comes after TPR on Friday announced the relaxation of some regulations, allowing employers to be up to 150 days late in making payments to workplace pension schemes.

However, employers are still expected to make up for all missed contributions in full and TPR said rules remain in place for persistent lateness, insolvency and fraudulent activity.

Arcadia has been contacted by Pensions Age for comment.

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