Following Wednesday evening’s adjournment of the meeting of Arcadia’s creditors until next Wednesday, June 12, Work and Pensions Committee Chair Frank Field has written to TPR with some detailed questions on the part of the CVA plans that cover funding Arcadia’s pension deficit.
The Chair writes: “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 this week’s meeting is a useful opportunity for us all to reflect on the CVA proposals”
On the 24th May the Chair wrote to Sir Philip Green asking the Arcadia Group Chairman to commit to replicating the funding he "personally provided" when a "similarly grim situation arose for BHS pension scheme members”. The letter noted however that this was not until after lengthy intervention by the Pension Regulator, and others, and asked Sir Philip this time to "offer a guarantee to Arcadia staff that you would do the same for them should the deficit reduction plan prove insufficient." TPR was copied on that letter to Sir Philip but responded proactively the same day (attached), noting “that the shareholder is prepared to put an additional £100m into the schemes over a number of years to provide a short-term bridge for the cut in deficit recovery contributions. However, we do not consider the proposals as they currently stand are sufficient to ensure that members of the schemes are adequately protected”.
The Chair continues today: “It is welcome that, since your letter, an additional £25 million in the form of asset security has been offered to the trustees—though I note that this is less than the £50 million in cash that TPR reportedly asked for…. As we understand it, the agreement you have secured consists of … total £385m. At the most recent publicly available update, the deficit in the schemes was between £537 million and £727 million … On the face of it, there would seem to be a substantial deficit remaining in the pension schemes” and goes on to a series of detailed questions about the pension proposals, including:
- “Whatever the outcome of the vote, what action will TPR take to enable the trustees to secure further funding from shareholders for the pension schemes to further reduce and ultimately eliminate the deficit?
- “Which assets form part of the £210 million offered as security and what is their current ownership status? More than half of the funding promised is in terms of security over assets. Do you consider that to be equivalent to cash funding? ”
- “Your letter says that TPR has ensured that the schemes’ trustees “understand and use the powers and leverage that they have”. Might you please tell us … in particular what powers and leverage TPR would advise trustees of other schemes to use if they find themselves in a situation such as the one at Arcadia?”
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