Field questions regulator on Arcadia pensions

Financial Times - 10 Jun 2019

Independent Labour MP Frank Field has written to The Pensions Regulator asking how it will ensure the Arcadia pension scheme deficit will continue to be reduced.

In a letter sent to the TPR’s chief executive Charles Counsell on June 6, Frank Field asked eight questions centring on the Company Voluntary Arrangement (CVA) plans that cover the funding of Arcadia’s pension deficit.

The ailing retailer has two final salary plans with a combined deficit in 2018 of £537m on technical provisions, or £727m on a buy-out basis (the amount needed for an insurer to take on the liabilities).

As part of the CVA, the retailer is proposing to decrease the annual contributions made to the schemes from £50m to £25m for three years, with additional security over "certain assets" being granted which amounts to £210m.

Lady Green - Sir Philip Green’s wife and the ultimate owner of Arcadia — has offered to bridge the shortfall with funding of £25m per year for the next three years, plus an additional £25m contribution, resulting in total payments of £100m.

Mr Field's letter came a day after the vote on the ailing retailer’s restructuring plan was delayed until June 12, due to the CVA being rejected by a landlord.

In his letter, Work and Pensions committee chair Frank Field wrote: "You will understand that, given our experience with BHS, we are very keen indeed not to see a repeat of the mistakes of the past. 

"We recognise that the best support for any pension scheme is a trading employer, and that you are alert to the risk of insolvency. 

"Nevertheless, the adjournment of [the] meeting is a useful opportunity for us all to reflect on the CVA proposals."

Mr Field asked TPR to assess the current level of Arcadia’s pension schemes’ deficit, taking into account the agreed contributions from Arcadia and Lady Green.

He also questioned the regulator on what action it will take to enable the trustees to secure funding from shareholders to "further reduce and ultimately eliminate" the deficit.

In the event of Arcadia becoming insolvent, Mr Field has asked the TPR what would be the pension scheme's rights to the £75m from Arcadia, the £100m from Lady Green and the £210m in asset security.

He has also asked TPR to outline which assets form part of the £210m security as well as their ownership status.

Mr Field has requested a response to the letter no later than Tuesday, 11 June.

Amy Austin, Financial Times