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Sir Philip Green facing pressure over £350m pension scheme

written by Bella Palmer
pension-scheme

The collapse has created uncertainty about the future of Arcadia’s pension scheme, which is suffering from a reported £350m funding shortfall

Multi-millionaire retail tycoon Sir Philip Green is facing public pressure to address a funding shortfall in the Arcadia pension scheme after the company’s collapse.

Arcadia, which owns TopShop, Topman, and Dorothy Perkins among others, fell into administration on Monday night. The collapse has left the fate of Arcadia’s 13,000 employees and roughly 500 stores hanging in the balance.

The collapse has also created uncertainty about the future of Arcadia’s pension scheme, which has around 10,000 members but is suffering from a reported £350m ($469.2m) funding shortfall.

Trustees of the scheme said on Monday night that the Arcadia pension plan would continue to pay out as normal but would be assessed by the Pension Protection Fund (PPF). The state-backed PPF is a pensions “lifeboat” that steps in to makeup payments for failing pension schemes.

Baroness Ros Altman, the former pensions minister, said the Arcadia scheme was “likely to enter the PPF, reducing most pensions by between 10% and 20% for the thousands of workers who may also lose their jobs.”

Politicians urged Sir Philip Green to step in and fill the funding gap to avoid this outcome.

Phillip Green should do the right thing and fill the Arcadia pension deficit, Labour leader Keir Starmer tweeted.

A spokesperson for London Mayor Sadiq Khan said it “would clearly be appropriate for the Green family to use some of their wealth to fill the huge gap which has been allowed to grow in the company’s pension fund.”

Sir Philip and his wife Tina bought Arcadia in 2002 and ran it until its collapse. The couple have an estimated net worth of £930m, according to the most recent Sunday Times Rich List.

Stephen Timms MP, the chair of the work and pensions select committee, wrote to The Pensions Regulator on Monday urging it to put the interests of Arcadia’s pension scheme members “front and centre”. Timms said the regulator should apply the “lessons” it learned from the collapse of BHS.

BHS, which was also formerly owned by the Green family, collapsed in 2016 with a half a billion pound hole in its pension scheme. Sir Philip was ultimately forced to pay £363m into the programme to help address the funding issues.

Baroness Altman, who was in government during the BHS crisis, expressed doubts that Sir Philip could be pressured to pay again. Altman said in a blog post the two situations were “not directly comparable”, pointing to the COVID-19 pandemic’s impact on Arcadia and a previous funding deal agreed with The Pensions Regulator.

Lady Tina Green, the ultimate owner of Arcadia, agreed a £385m funding package for the Arcadia pensions scheme with the regulator last year. Altman said this deal showed that, unlike with BHS, the Greens were doing something to address the funding issues, even if the agreed package would not be enough to avoid haircuts to pensioner payouts.

A spokesperson for The Pensions Regulator said it was “aware of the challenges” facing Arcadia and said it would “continue to work 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.”

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