The Pension Protection Fund’s director of restructuring and insolvency, Malcolm Weir, has revealed the PPF has reached a “wide ranging deal” with Carpetright, following the retailer’s Company Voluntary Arrangement (CVA).

It was announced yesterday, 26 April, that creditors of Carpetright voted to approve the CVA, which will see the closure of 81 stores in September 2018.

Speaking at the Pensions Age Spring Conference, on the same day as the approval, Weir said: “We’ve done an even more [than Toys R Us] wide ranging agreement with [Carpetright] to ensure that even if that CVA should fail, the money will come into the scheme...all the time we are looking to protect the schemes, and eventually our levy payers.”

Unlike other British high street brands such as BHS and Toys R Us, which had substantial pension deficits when they proposed CVAs, Carpetright’s most recent information about its defined benefit scheme reveals a deficit of £200,000. The retailer said it had reduced its defined benefit pension deficit by £3m, from £3.2m to £200,000, due to actuarial gains of £2.6m and a contribution of £400,000. As at 28 October, the scheme had assets of £30.1m and liabilities of £30.3m

Commenting on the approval of the CVA, a PPF spokesperson said: ‘‘Throughout the Carpetright CVA process members of the pension scheme have been protected and will continue to be protected by the PPF. Having received assurances about the position of the pension scheme we were able to support the CVA proposals. Our expectation is that the company will now retake responsibility for the pension scheme’’.

Speaking more generally about insolvencies and restructurings, Weir said that the PPF only gets involved with an insolvency in the event of an appointment of an insolvency administrator. With a CVA, however, the PPF becomes involved the moment it is launched in court, as that is what starts an assessment period.

“During that assessment period, we work with advisers, trustees, administrators, working out whether the scheme is sufficiently funded to pay benefits above PPF compensation levels, or whether it is eventually going to come into the PPF,” he explained.

Weir also noted that with a pre-pack administration, there is a risk that employers can use them to “effectively dump their pension schemes”. In terms of restructurings, he stressed that the PPF doesn’t get involved with many, but when they do occur they are high profile. These include: Monarch, Halcrow, UK Coal, Hoover, British Steel Pension Scheme and Toys R Us. However, he highlighted that in 2017 there was only two, and over the past five years there has been just 15.

For schemes with companies in a difficult position he said the main thing is to engage early.

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