Arcadia pension fund delivers early Christmas cheer for former staff

Thousands of former employees of Sir Philip Green’s Arcadia Group have received an unexpected financial boost following news that the company’s pension scheme is now in surplus. This development offers much-needed security for those reliant on retirement benefits after years of uncertainty following the collapse of Green’s fashion empire.

The trustees of the defined benefit pension scheme sent letters this week to members, confirming that the fund is now able to pay benefits at approximately 7 per cent above initial projections for those with pension pots below £150000. This marks a significant turnaround from November 2020 when Arcadia entered administration with a £510 million shortfall in its pension scheme, triggering widespread concern about the safety of thousands of workers’ retirement savings.

The reversal in fortune can be traced back to a £100 million capital injection from the Green family in 2019 as part of a restructuring attempt. This financial support combined with higher than predicted returns from the sale of the group’s assets has transformed the fund’s position. The pension scheme received £180 million from asset disposals, such as the sale of the Topshop flagship premises on Oxford Street, and has benefited from prudent management throughout the administration process.

The Arcadia Group Pension Schemes also completed an £850 million pension buy-in with Aviva in February 2023. The transaction secured improved benefits for over 8800 members, exceeding what would have been provided by the Pension Protection Fund and safeguarding the scheme from intervention by the industry lifeboat.

Following Arcadia’s collapse during the Covid pandemic, the company was estimated to owe around £800 million to various creditors, including £163 million to suppliers and £36.5 million to landlords. The pension fund, as a secured creditor, was prioritised for repayment ahead of other stakeholders during the asset liquidation process overseen by Teneo’s financial advisory partners, who assumed responsibility for the administration from Deloitte.

For thousands of former Arcadia staff, these events bring a measure of relief and financial stability, ensuring that pensions not only remain secure but are delivered at higher levels than previously anticipated.