There have been fresh calls for the government to step in and demand retail tycoon Philip Green to plug Arcadia’s pension deficit, as the pensions lifeboat fund begins assessing the scheme.
Earlier this week online retailer Asos said it had bought Topshop, Topman, Miss Selfridge and HIIT brands from Arcadia, which fell into administration in December.
Philip Green’s family will reportedly make £50m from the sale of Topshop.
The £330m deal saw Asos acquire the brands for £265m, pay £30m for the stock in hand, and stump up £35m for stock orders still to come, but Asos will not take on responsibility for Arcadia’s pension schemes.
Shadow business secretary Ed Miliband said Green’s family should plug the deficit with proceeds from the sale.
“Arcadia employees should not pay the price of Philip Green’s greed. His family extracted the largest dividend in history from Arcadia. The least he can do is help plug the pension deficit with the proceeds of this sale,” said Miliband.
“If he does not do that pensioners of Arcadia will lose out. The government must come out clearly and unequivocally and say Philip Green must show that responsibility.”
Arcadia’s administration left a pensions deficit estimated to be as much as £350m. Days after Arcadia entered administration, Philip Green’s family promised to pay £50m into the high-street empire’s pension scheme within 10 days.
A spokesperson from The Pensions Regulator said the watchdog was encouraged by the “strong level of recovery that has initially been obtained for the schemes as a result of the security enhancements obtained at the time of the CVA in June 2019.”
Last year Lady Green committed to paying £100m into Arcadia’s scheme in instalments. The final third and fourth instalment of £25m were not due until September 2021, but Green brought them forward to December 2020.
Not like BHS
Ros Altmann, a former pensions minister and Tory peer, said she would love to see Green and family put more money towards the pension, but the process would be expensive.
“BHS was in a very different position where it looked as if the pension scheme hadn’t been appropriately treated, but what happened here was that the regulator was already involved, the trustees have worked with the regulator, and [the Green family] seem to have met the required commitments [for Arcadia’s pension fund],” she explained.
In 2017 Green agreed to hand over £363m in cash to rescue the BHS pension scheme after the brand collapsed into administration, settling one of the biggest pension rows in the City for decades.
If Green and family were to plug Arcadia’s pensions deficit, she said, it would mean buying out the scheme from the PPF – a very expensive process.
Altmann said putting the £50m earned by the Green family as a result of the Topshop sale would be of no specific benefit to the affected staff, as that money would merely go to the PPF, rather than to the individuals.
“I believe this pension scheme has been handled and treated better – partly because the regulator became involved and having had this problem with BHS, lessons were learned. On both sides, for the regulator and the Greens,” she added.
‘Make good on the deficit’
Arcadia’s pension schemes are currently being assessed by the Pension Protection Fund (PPF), which will ultimately determine whether the schemes can be transferred to the lifeboat fund, or not.
Frank Field, the ex-MP and former chair of the pensions select committee, told City A.M. the government should ask Green and his wife to plug the pensions deficit.
“Philip and Lady Green have the distinction of drawing the biggest ever company dividend of £1.2bn,” he said.
“The government should ask them to use only some of this total to make good the pension deficits which scar every one of the companies, for which Sir Philip was responsible,” adding that Green should be “sent the bill” for the deficit.
Union Usdaw added: “We would welcome any scrutiny of the Arcadia pension scheme, because that will only be a benefit to its future and current pensioners.
“We are in no doubt that the select inquiry into the BHS pension scheme brought Sir Philip Green to the table and make public commitments, so we would welcome MPs investigating the Arcadia scheme, along with the pension regulator.
“The PPF will be going through their processes and we welcome that the Arcadia scheme’s members are protected to at least 90 per cent of the value of their benefits. However it would be appalling if these hard-working blameless employees and pensioners were to lose anything because of yet another failure of corporate management.”
What is the lifeboat fund?
- The Pension Protection Fund (PPF) is a scheme that exists to protect members of defined benefit schemes (DB) that become insolvent
- It is funded by a levy on eligible DB schemes – not the taxpayer
- Members of DB PPF schemes who are not of retirement age get 90 per cent of their entitled pension benefit when they retire
- Those over normal retirement age quality for 100 per cent of their benefits, as well as those on ill-health retirement pensions and (usually) anyone receiving a survivor’s pension.