Fears for pensions as Philip Green's Arcadia faces collapse

Sarah Butler and Michael Savage
·3-min read
<span>Photograph: Christopher Thomond/The Guardian</span>
Photograph: Christopher Thomond/The Guardian

Labour and the Unite union have called on Sir Philip Green to ensure his retail empire’s pension scheme is fully funded if administrators are called in.

Arcadia Group, which owns Topshop, Miss Selfridge, Dorothy Perkins, Wallis, Evans, Outfit and Burton, is set to seek protection from creditors after months of Covid shutdowns exacerbated existing problems at the fashion group.

If administrators are called in, potentially as early as Monday, the group’s pension fund will be taken on by the industry-backed pensions lifeboat. The fund has an estimated deficit of as much as £350m.

Under the lifeboat scheme, members who have yet to claim their pension could lose up to 10% of their payout if the scheme’s deficit is not made up.

Lucy Powell, Labour’s shadow minister for business and consumers, said: “Sir Philip Green should do what is right and cover Arcadia’s pension deficit to make sure hard-working people don’t pay the price.”

Matt Draper, national officer for Unite, which represents some Arcadia workers, said: “Thousands of Arcadia’s existing workforce and its previous employees face the prospect of the value of their pension being greatly diminished in yet another example of bandit capitalism on the UK’s high street.

“These workers are totally blameless yet will be paying the price of Sir Philip Green’s mismanagement in their retirement while he enjoys a very comfortable old age on his yacht in the south of France.”

The union said the government should give the pension regulator tougher powers to step in and prevent employers from allowing pension deficits to widen.

It said rules should be introduced to ensure that companies could not prioritise funding shareholder dividends, bonuses and executive pay over pension deficit payments.

All eyes are on Green over the handling of Arcadia’s pension scheme after the department store BHS collapsed into administration in 2016 with a £571m pension deficit only a year after Green sold it for £1 to Dominic Chappell, a former bankrupt. Green eventually paid £353m to support the BHS scheme after pressure from the pensions regulator.

The Arcadia deficit is also controversial as the Green family has benefited from a £1.2bn dividend from the company, the biggest corporate pay cheque when it was paid in 2005, as well as more than £300m in interest payments on loans and rents on properties the family owned.

Despite those payouts, Arcadia’s pension scheme is in a much stronger position than BHS’s was.

Last year, Tina Green, 71, Green’s wife, who lives in Monaco and is the ultimate owner of Arcadia, pledged to pay an extra £100m into the Arcadia scheme over three years and signed over rights to property worth £210m. Tina Green has already paid £50m of the promised additional cash and the rest is guaranteed to be paid next year.

However, according to the pensions expert John Ralfe, who advised a parliamentary investigation into the demise of BHS, the fall in the value of retail property means a sale of the Arcadia assets is unlikely to fill the pension hole.

Sir Ed Davey, leader of the Liberal Democrats, said: “Whilst Covid has undoubtedly been a nightmare for clothes retailers, let’s be clear; Arcadia was in deep trouble even before Covid hit.

“Philip Green is one of the most unsympathetic figures in British business. In a time when government should be spending all it can to support vulnerable people Philip Green should be reaching into his deep pockets to sort out the pension black hole.”

Arcadia is preparing to appoint Deloitte as administrators despite Sky News reporting that Mike Ashley’s Frasers Group, which owns Sports Direct and House of Fraser, has offered a rescue loan to the business. Such a loan could put Ashley, one of Green’s biggest rivals, in control of any break-up of the business.

Chris Wootton, Frasers’ chief financial officer, said: ‘We hope that Sir Philip Green and the Arcadia Group will contact us today to discuss how we can support them and help save as many jobs as possible.”