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You can find the current article at its original source at https://www.theguardian.com/business/2019/may/23/philip-greens-retail-rescue-plan-torpedoed-by-pension-watchdog
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| Philip Green's retail rescue plan at risk over pension scheme | Philip Green's retail rescue plan at risk over pension scheme |
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| Sir Philip Green’s rescue of his Topshop-to-Burton retail empire has been thrown into doubt after the Pensions Regulator (TPR) said the former billionaire’s restructuring plan did not adequately protect the group’s 9,500 pension scheme members. | Sir Philip Green’s rescue of his Topshop-to-Burton retail empire has been thrown into doubt after the Pensions Regulator (TPR) said the former billionaire’s restructuring plan did not adequately protect the group’s 9,500 pension scheme members. |
| Green’s Arcadia Group has until 5 June to agree a deal with the regulator and trustees of two legacy pension funds, which have a deficit of as much as £750m. | Green’s Arcadia Group has until 5 June to agree a deal with the regulator and trustees of two legacy pension funds, which have a deficit of as much as £750m. |
| The talks come after Arcadia announced plans to close 23 UK stores with the loss of 520 jobs and seek rent cuts on up to 194 of its 566 UK and Irish stores in a rescue package that also involves the closure of all Topshop’s 11 stores in the US. | The talks come after Arcadia announced plans to close 23 UK stores with the loss of 520 jobs and seek rent cuts on up to 194 of its 566 UK and Irish stores in a rescue package that also involves the closure of all Topshop’s 11 stores in the US. |
| As part of the deal, Arcadia, which also owns Dorothy Perkins, Miss Selfridge, Wallis, Evans and Outfit, wants to halve payments to its legacy pension funds, which have a deficit of at least £537m, to £25m a year for three years. | As part of the deal, Arcadia, which also owns Dorothy Perkins, Miss Selfridge, Wallis, Evans and Outfit, wants to halve payments to its legacy pension funds, which have a deficit of at least £537m, to £25m a year for three years. |
| Green’s wife, Christina, who is the formal owner of the business, has agreed to top up the pension fund with £100m of additional cash over the next three years to help bridge a deficit that could balloon to about £750m if the company were to go bust. | Green’s wife, Christina, who is the formal owner of the business, has agreed to top up the pension fund with £100m of additional cash over the next three years to help bridge a deficit that could balloon to about £750m if the company were to go bust. |
| Philip Green offers landlords 20% stake in Arcadia rescue plan | Philip Green offers landlords 20% stake in Arcadia rescue plan |
| Arcadia has also offered the trustees of the funds, which were closed to new savers some time ago, security over unnamed assets, thought to be Topshop’s London flagship store, which is worth about £400m, although it has a mortgage of more than £300m. | Arcadia has also offered the trustees of the funds, which were closed to new savers some time ago, security over unnamed assets, thought to be Topshop’s London flagship store, which is worth about £400m, although it has a mortgage of more than £300m. |
| Winning the support of the regulator is vital for the success of Green’s restructuring plan, known as a company voluntary arrangement (CVA), which must be approved by creditors. | Winning the support of the regulator is vital for the success of Green’s restructuring plan, known as a company voluntary arrangement (CVA), which must be approved by creditors. |
| The Pensions Regulator, which has legal powers to force Arcadia and Green to ensure its pension is properly funded, said: “As part of our role to protect pension savers and the Pension Protection Fund [PPF], we remain in discussions with the company and the trustees to understand the impact of the CVA proposals on the scheme and to ensure the strongest possible outcome is achieved. | The Pensions Regulator, which has legal powers to force Arcadia and Green to ensure its pension is properly funded, said: “As part of our role to protect pension savers and the Pension Protection Fund [PPF], we remain in discussions with the company and the trustees to understand the impact of the CVA proposals on the scheme and to ensure the strongest possible outcome is achieved. |
| “We do not consider the proposals are sufficient to ensure that members of the scheme are adequately protected.” | “We do not consider the proposals are sufficient to ensure that members of the scheme are adequately protected.” |
| A spokesman for the fund trustees said discussions would continue with Arcadia, with the aim of reaching an agreement before creditors vote on the rescue package on 5 June. | A spokesman for the fund trustees said discussions would continue with Arcadia, with the aim of reaching an agreement before creditors vote on the rescue package on 5 June. |
| Physical retailers have been hit by a combination of changing habits, unseasonably warm weather, rising costs and broader economic problems. The past year saw the disappearance of Toys R Us, Maplin and Poundworld as a result. | Physical retailers have been hit by a combination of changing habits, unseasonably warm weather, rising costs and broader economic problems. The past year saw the disappearance of Toys R Us, Maplin and Poundworld as a result. |
| In terms of habits, shoppers are switching to buying online. The likes of Amazon have an unfair advantage because they have a lower business rate bill, which holds down costs and enables online retailers to woo shoppers with low prices. Business rates are taxes, based on the value of commercial property, that are imposed on traditional retailers with physical stores. | In terms of habits, shoppers are switching to buying online. The likes of Amazon have an unfair advantage because they have a lower business rate bill, which holds down costs and enables online retailers to woo shoppers with low prices. Business rates are taxes, based on the value of commercial property, that are imposed on traditional retailers with physical stores. |
| At the same time, there is a move away from buying ‘stuff’ as more people live in smaller homes and rent rather than buy. Those pressures have come just as rising labour and product costs, partly fuelled by Brexit, have coincided with economic and political uncertainty that has dampened consumer confidence. | At the same time, there is a move away from buying ‘stuff’ as more people live in smaller homes and rent rather than buy. Those pressures have come just as rising labour and product costs, partly fuelled by Brexit, have coincided with economic and political uncertainty that has dampened consumer confidence. |
| Trading has been tough, particularly for clothing retailers, as another relatively mild autumn hit sales of costly items such as coats and knitwear while shoppers have held out later than ever in the hope of getting bargain presents. The founder of Sports Direct, Mike Ashley, described November as “the worst on record, unbelievably bad” as he warned that warned that Debenhams and other big retail names faced being “smashed to pieces” by a high street downturn.Even online specialist Asos shocked the City when it issued a profits warning earlier this month as it admitted it had lost sales by not offering steep enough discounts during the Black Friday week. | Trading has been tough, particularly for clothing retailers, as another relatively mild autumn hit sales of costly items such as coats and knitwear while shoppers have held out later than ever in the hope of getting bargain presents. The founder of Sports Direct, Mike Ashley, described November as “the worst on record, unbelievably bad” as he warned that warned that Debenhams and other big retail names faced being “smashed to pieces” by a high street downturn.Even online specialist Asos shocked the City when it issued a profits warning earlier this month as it admitted it had lost sales by not offering steep enough discounts during the Black Friday week. |
| Retailers with a high street presence want the government to change business rates. They also want more political certainty as the potential for a no deal Brexit means some are not only incurring additional costs for stockpiling goods but are unsure about the impact of tariffs after March 2019. Retailers also want more investment in town centres to help them adapt to changing trends, as well as a cut to high parking charges which they say put off shoppers. | Retailers with a high street presence want the government to change business rates. They also want more political certainty as the potential for a no deal Brexit means some are not only incurring additional costs for stockpiling goods but are unsure about the impact of tariffs after March 2019. Retailers also want more investment in town centres to help them adapt to changing trends, as well as a cut to high parking charges which they say put off shoppers. |
| In the October budget the government announced some relief on business rates for independent shopkeepers. It has also set up a £675m “future high streets” fund under which local councils can bid for up to £25m towards regeneration projects such as refurbishing local historic buildings and improving transport links. The fund will also pay for the creation of a high street taskforce to provide expertise and hands-on support to local areas. | In the October budget the government announced some relief on business rates for independent shopkeepers. It has also set up a £675m “future high streets” fund under which local councils can bid for up to £25m towards regeneration projects such as refurbishing local historic buildings and improving transport links. The fund will also pay for the creation of a high street taskforce to provide expertise and hands-on support to local areas. |
| Some retailers could go under. Weakened by a difficult Christmas – which accounts for the entire annual profits of many retailers, and with further Brexit wobbles to come – retailers are facing a tough 2019. Another rise in the national minimum wage in April and the falling value of the pound against the dollar, which is used to buy goods in the Far East, will also add to costs and hit profits. | Some retailers could go under. Weakened by a difficult Christmas – which accounts for the entire annual profits of many retailers, and with further Brexit wobbles to come – retailers are facing a tough 2019. Another rise in the national minimum wage in April and the falling value of the pound against the dollar, which is used to buy goods in the Far East, will also add to costs and hit profits. |
| “Now that Arcadia has started the formal CVA process the trustees are writing to all members with information about what the CVA means for them. All benefits are being paid in full. The trustees and their professional advisers are working hard to achieve the best outcome for scheme members,” the spokesman said. | “Now that Arcadia has started the formal CVA process the trustees are writing to all members with information about what the CVA means for them. All benefits are being paid in full. The trustees and their professional advisers are working hard to achieve the best outcome for scheme members,” the spokesman said. |
| Because a CVA is a form of insolvency, the future of Arcadia’s legacy pension schemes, which are now closed to savers, must be considered for entry to the PPF, an industry-backed pensions lifeboat scheme. | Because a CVA is a form of insolvency, the future of Arcadia’s legacy pension schemes, which are now closed to savers, must be considered for entry to the PPF, an industry-backed pensions lifeboat scheme. |
| As a result, the PPF, after consulting with the regulator and trustees, will vote on the CVA and will have a major influence on its outcome because the fund is such a large creditor. | As a result, the PPF, after consulting with the regulator and trustees, will vote on the CVA and will have a major influence on its outcome because the fund is such a large creditor. |
| The PPF said: “We are unable to comment on whether we will support the CVA until we have reviewed the proposal to identify if it is in line with our published principles and is in the best interest of the scheme and the PPF. | The PPF said: “We are unable to comment on whether we will support the CVA until we have reviewed the proposal to identify if it is in line with our published principles and is in the best interest of the scheme and the PPF. |
| “We understand that this must be a concerning time for members of both schemes and we want to assure them that the PPF is here to protect them.” | “We understand that this must be a concerning time for members of both schemes and we want to assure them that the PPF is here to protect them.” |
| From Topshop to Dorothy Perkins: the 23 shops being shut by Philip Green | |
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