The Pensions Regulator has expanded its examination of Sir Philip Green’s business empire by demanding information from Arcadia – the owner of Topshop, Dorothy Perkins and Miss Selfridge – about the state of its pension scheme.
Lesley Titcomb, the chief executive of the Pensions Regulator (TPR), revealed in a letter to Labour MP Frank Field that the organisation had used a so-called section 72 notice to gain information about the Arcadia pension scheme and will continue to monitor it.
Arcadia has a pension deficit of £151m according to accounts for the year to the end of August 2015, although it is likely to have increased since then due to movements in bond yields. Green and his family received a £1.2bn dividend from Arcadia in 2005.
Field, who led a parliamentary investigation into the collapse of BHS, said the state of the Arcadia pension scheme is a “terrible concern”.
He said: “We are pleased to see that the Pensions Regulator has used its powers to demand information from Arcadia about yet another of Sir Philip Green’s pension funds that is going deep into deficit, but it is a terrible concern that it has got to this stage again. Is Sir Philip going to ‘sort’ this one too?”
A section 72 notice is a legal demand from TPR for a party to hand over documents or information relating to a pension scheme. In her letter to Field, Titcomb, who give evidence to MPs on Wednesday about the regulation of pension schemes, said TPR had “no issues” with previous triennial valuations of the Arcadia pension scheme in 2007, 2010 and 2013 but had opened talks with the company and the pension trustees about the latest valuation.
Titcomb said: “We have had separate discussions with the trustees to better understand the schemes’ position with respect to their sponsoring employers. These discussions were supported by the use of section 72 notices seeking information from other parties.
“We continue to monitor the Arcadia schemes on an ongoing basis. We will of course also consider the impact of our discussions and investigation concerning the BHS pension schemes on the employer covenant and position of the Arcadia pension schemes.”
TPR has already launched legal proceedings against Green and Dominic Chappell, the former owners of BHS, in an attempt to fill the £571m black hole in the collapsed retailer’s pension scheme. The regulator is understood to be seeking about £300m from the billionaire tycoon, who pledged to “sort” the problems facing the BHS pension scheme when he appeared in front of MPs in June
BHS collapsed into administration in April, leading to the loss of 11,000 jobs. Green controlled the business for 15 years until he sold it to Chappell, a three-time bankrupt, for £1 in March 2015. Green, his family, and other BHS shareholders collected at least £580m from the retailer, while Chappell’s company Retail Acquisitions was paid an estimated £17m. Field’s parliamentary investigation concluded that BHS had been systematically plundered.
In a separate letter – sent on Monday – Field has asked Titcomb whether the regulator has the power to secure compensation for a pension scheme by seizing assets rather than making a cash demand. This would raise the prospect of TPR acquiring assets from the Green family, potentially even their £100m superyacht.
Arcadia and Green declined to comment, although he has previously said that Arcadia is profitable – it generated pre-tax profits of £151m last year – and has made regular contributions to its pension scheme.
In a further development in the BHS scandal, a report on the progress of the administration of the retailer published by the administrators has revealed a clash with the Pension Protection Fund, the state-backed lifeboat for retirement funds.
Duff & Phelps, one of the joint administrators, says in the report that it was “not imperative at this stage” to liquidate BHS and it risks lowering the amount of cash recovered for creditors and increasing costs.
The PPF is pushing for the liquidation to begin by the end of the month and has lined up FRP Advisory to handle it. The PPF has responsibility for the BHS pension scheme and is therefore the biggest creditor.
Malcolm Weir, head of restructuring and insolvency at the PPF, commented: “We are intent on securing the best possible recovery on behalf of the pension schemes from the insolvent company. Given that the company has not traded since August, we believe a liquidator will be able to progress all remaining issues at least as quickly as the current administrators, including the remaining leases and the ongoing investigatory work.
“This will expedite the investigations and reduce costs, it is therefore in the interests of pension scheme members and our levy payers to do this promptly.”
