Timms calls on Green family to plug Arcadia’s pension deficit

Work and Pensions Committee (WPC) chair, Stephen Timms, has called on Philip Green and his family, the owners of Arcadia, to plug the firm’s pension deficit.

The company, which includes Topshop, Burton and Dorothy Perkins, is on the brink of administration and has an estimated pension deficit of £350m.

"This is a dreadful time for Arcadia staff to be worrying about their jobs and their pensions,” Timms stated.

"Whatever happens to the group, the Green family must make good the deficit in the Arcadia pension fund.”

Timms added that he will be writing to The Pensions Regulator (TPR) today to “underline the importance of securing the interests of pension scheme members”.

The Arcadia pension scheme has around 10,000 members and would enter the Pension Protection Fund (PPF) if the company falls into administration, with a 10 per cent reduction to staff pension payouts expected.

Aegon head of pensions, Kate Smith, commented: “The Arcadia Group’s collapse with its £350m hole in its defined benefit scheme funding looks like history repeating itself.

"If the scheme is eligible, the PPF, the pension industry’s lifeboat, will pick up the group’s defined benefit scheme, protecting members’ pensions. This is likely to be a relief to the group’s employees, who while facing a loss of their job, will have some reassurance their pensions will be largely safe.

"However, those who had not reached the scheme ‘s normal pension age, will face a 10 per cent cut in their pensions, even if they started to receive a pension before this. Those who had reached their normal pension age will receive their pension in full, including pension increases relating to pensionable service after 6 April 1997.

“Fierce negotiations still have to take place between the Arcadia Group and TPR, with calls to Sir Philip Green to plug the £350m funding gap.

“This could be the first real test of the Pension Schemes Bill which, once it has been given royal assent, will give TPR new powers to intervene, if it’s not too late.”

The company’s pension scheme has been under threat for some time, with Arcadia only saving its pension scheme from entering the PPF by having seven company voluntary arrangements (CVA) approved by creditors in June 2019.

However, Arcadia Group moved to suspend its £2m monthly contributions to its pension scheme back in March, in an effort to retain cash during the coronavirus crisis.

Green, husband of Arcadia’s registered owner, has previously been accused of shirking his responsibilities towards pensioners after selling BHS to Dominic Chappell for £1 in 2015, only for the retailer to collapse a year later with a pension deficit of £571m.

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