The Pensions Regulator is scrutinising the dividends withdrawn from Wilko as part of an inquiry into the high street discount chain’s downfall.
The chain collapsed in August, putting over 12,000 jobs at risk, and now family shareholders are facing pressures to fill a £56m deficit in its pension fund, the Sunday Times has reported.
It said PwC – Wilko’s appointed administrators – estimated the deficit of its defined benefit scheme to be at £76m “on a buyout basis” last week and the scheme is “set to recover £20m thanks to the security it holds over a handful of Wilko’s freehold properties.”
The defined benefit scheme consists of nearly 2,000 members, many of whom have already retired.
If company owners’ actions are proved to have risked savers’ benefits, the regulator can order them to fill the pension shortfalls.
Over the past two decades, over £100m in dividends were extracted by the Wilkinson family, the Sunday Times said, including nearly £3.75m in the year leading up to its collapse.
Lisa Wilkinson, Wilko’s chairwoman from 2014 and granddaughter of the founder, was previously called upon to address the £56m hole in the pension fund.
She told the Sunday Times last month that the board “checked” and there was “sufficient cash” adding that it had also gone through the “right governance”.
“Is there a bit of me lying awake at night saying I wish we’d never taken a penny of dividends out? Well, genuinely, would it have made any difference to where we are today? It might have made us survive a couple of months longer. What we have taken out really wouldn’t have made a difference,” she added.
The Pension Protection Fund is currently assessing Wilko’s pension fund and will “fully protect the savings of members already at retirement age,” the Sunday Times said. However, those below retirement age could face a 10 per cent income cut.
City A.M. has contacted PwC and The Pensions Regulator for comment.