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Labor and the Unite union have asked Sir Philip Green to ensure that his retail empire’s pension plan is fully funded if administrators are called in this week.
Arcadia Group, which owns Topshop, Miss Selfridge, Dorothy Perkins, Wallis, Evans, Outfit and Burton, is expected to seek protection from creditors after the Covid shutdowns compounded its existing woes.
If managers are called in, potentially as early as Monday, the group’s pension fund will be taken over by the industry-backed pension lifeboat. The fund has an estimated deficit of up to £ 350 million.
Under the lifeboat scheme, members who have not yet retired could lose up to 10% of their pay if the shortfall in the scheme is not made up.
Lucy Powell, Labor Shadow Minister for Business and Consumers, said: “Sir Philip Green should do the right thing and cover the Arcadia pension deficit to make sure that working people don’t pay the price.”
Matt Draper, a national officer for Unite, who represents some Arcadia workers, said: “Thousands of Arcadia’s existing workforce and its former employees face the prospect of their pension value falling dramatically in another example of bandit capitalism in the main street of the UK.
“These workers are totally innocent, but they will pay the price for Sir Philip Green’s mismanagement in 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 stricter powers to intervene and prevent employers from allowing the pension deficit to widen. He said the rules should ensure that companies cannot prioritize the financing of dividends, bonuses and executive payments to shareholders over payments of the pension deficit.
TUC Secretary General Frances O’Grady said: “Philip Green has already been condemned by MPs for causing the BHS to collapse through ‘systematic looting, a series of bad business decisions and personal greed.’ Weak corporate governance rules appear to be allowing history to repeat itself.
“The government must do more to defend workers in companies where they are not treated with dignity and their jobs are at risk of mismanagement and greed. The UK should follow good practice in the rest of Europe with laws requiring representation of workers on boards and legal requirements to bargain with unions ”.
All eyes are on Green’s handling of Arcadia’s pension scheme after the BHS department store collapsed in management in 2016 with a £ 571 million pension deficit just a year after Green sold it for £ 1 to Dominic Chappell, a former bankrupt. Green eventually paid £ 353 million to support the BHS scheme after pressure from the pension regulator.
Arcadia’s deficit is also controversial, as the Green family has benefited from a £ 1.2 billion dividend from the company in 2005, as well as over £ 300 million in interest payments on loans and rentals from family-owned properties.
Despite those payments, Arcadia’s pension plan is in a much stronger position than BHS. Last year, Tina Green, 71, Green’s wife, who lives in Monaco and is the ultimate owner of Arcadia, pledged to pay an additional £ 100 million into the Arcadia scheme over three years and signed property rights worth 210 million pounds. Tina Green has already paid £ 50m of the promised additional cash and the remainder is guaranteed to be paid next year.
But according to pension expert John Ralfe, who advised on a parliamentary investigation into BHS’s disappearance, the drop in the value of retail properties means the sale of Arcadia’s assets is unlikely to fill the pension gap.
Sir Ed Davey, leader of the Liberal Democrats, said: “While Covid has undoubtedly been a nightmare for clothing retailers, Arcadia was in deep trouble even before Covid hit.
“Philip Green is one of the least sympathetic figures in British business. At a time when the government should be spending everything possible to support vulnerable people, Green should be reaching into his deep pockets to solve the pension black hole. “
Arcadia is preparing to appoint Deloitte as trustees, despite Sky News reporting that Mike Ashley’s Frasers Group, owner of Sports Direct and House of Fraser, has offered a rescue loan to the company. Such a loan could put Ashley, one of Green’s biggest rivals, in command of any business breakdown.
Chris Wootton, Frasers CFO, said: “We look forward to Sir Philip Green and the Arcadia Group reaching out to us today to discuss how we can support them and help save as many jobs as possible.”
