Sir Philip Green is seeking to halve the annual contributions to the Arcadia Group’s pension scheme as part of its restructuring plan.
According to Sky News, Green wishes to cut the annual pension fund from £50m to £25m and made the proposal during discussions between Arcadia’s advisers, its pension trustees and The Pensions Regulator.
Sky News also reported Arcadia is considering a switch from RPI to the lower CPI inflation measure of calculating annual payment uplifts in order to lower the company’s pension deficit calculation. It is understood to currently have a deficit of about £550m on a conventional funding basis, and £750m on a full buyout basis. However this move would also see its 18,000 employees benefits reduced.
The news follows reports last month which indicated Green was considering proposing a CVA which would be launched in late April or early May, closing up to 67 stores. It also comes just over two years after he was forced to contribute £363m in pension payments to thousands of former BHS workers.
At the time, a spokesperson for the retail group said it was “exploring several options to enable the business to operate in a more efficient manner”. A CVA will require approval not only from shareholders, but also The Pensions Regulator where Arcadia will have to show its ability to meet its pension contribution obligations.
Arcadia has been contacted for comment.