The chair of a committee of UK lawmakers has written to the country’s pensions regulator to highlight the importance of protecting the interests of pension scheme members of high street retail company Arcadia Group, reportedly on the brink of collapse.
The letter calls for clarity on the status of the £385m (€422.5m) package previously agreed by The Pensions Regulator (TPR), Arcadia and the group’s owner Lady Green, and asks whether Arcadia pension deficit reduction contributions had been affected by the guidance TPR introduced for defined benefit scheme funding and investment during the COVID-19 pandemic.
It also asks what was being done to protect Arcadia scheme members from pension scammers and about the guidance on DB superfunds.
Arcadia, which owns high street brands such as Topshop, Burton and Dorothy Perkins and could face collapse today, according to media reports, which have put the pension deficit as being up to £350m.
Arcadia is the retail business of Sir Philip Green, who reached a settlement with TPR in 2017 to pay £363m to the pension schemes of BHS, a now defunct retail chain he sold for the nominal fee of £1 in 2015.
As he had pledged to do over the weekend, Stephen Timms, chair of the Work and Pensions Committee, today wrote to TPR about the Arcadia situation.
“There is unquestionably a moral case for the Green family to do the right thing and guarantee Arcadia’s hardworking staff what is rightfully theirs, whatever happens this Christmas,” he said.
“But The Pensions Regulator must also ensure that it is doing everything in its power to fight the corner of the pension scheme members.
“This is a crucial moment for the Regulator to show that it has learned the lessons of previous corporate collapses, such as those of BHS and British Steel. While staff will be worried about possible job losses, The Pensions Regulator must take firm and decisive action to protect them from fraudsters.”
A spokesperson for TPR said: “We are aware of the challenges that the business is currently facing in these unprecedented times and we are working with the directors, the trustees and their respective advisers, as well as the PPF, to protect the position of the Arcadia pension schemes’ members to the fullest extent possible.”
Ros Altmann, former pensions minister, said the Arcadia case was not directly comparable to that of BHS as in that case the pensions regulator had concerns about the lack of funding for the pension scheme over many years and the business having been offloaded without plans to fix the deficit.
In the case of Arcadia, however, Altmann noted, Sir Philip and his wife had agreed a schedule of pension deficit repair contributions, with half of that already paid.
“It is true that Sir Philip Green did pay £363m to rescue the BHS pension scheme from the Pension Protection Fund, and he has always said that the workers are like family to him, but in the current retail environment, and given the lack of apparent legal or regulatory obligations to do so, it would be unwise to rely on such an outcome,” Altmann said.
If Arcadia’s pension scheme gets taken on by the DB lifeboat fund current and deferred members below normal pension age for the plans will receive 90% of expected benefits. There is also a cap on compensation for higher earning members. Schemes of insolvent employers first go into a PPF assessment period, which can last for some time. Pensions in payment continue to be paid on their normal due dates.
This article was updated after initial publication to include comments from Ros Altmann.