Some of the lowest paid workers at collapsed department store Debenhams are facing a pension cut after the retail giant was sold off with a £32million deficit.
The company's retirement scheme is set to be taken over by the government’s emergency Pension Protection Fund, which would mean a 10% cut in payments for workers approaching retirement age.
The chain’s online arm was sold off to Boohoo in January for £55million, although all physical stores have now shut – at a loss of over 12,000 jobs.
The liquidation makes Debenhams one of the biggest high street casualties since Woolworths disappeared in 2009 - and the biggest retail loss since the pandemic began.
Three quarters of the chain's redundancies affected women - all of whom have now completed their consultation period.
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They face a devastating hit on their retirement savings, worsening the pension gender pay gap.
Former executives who cashed in millions in the years prior to the chain’s collapse have been criticised by MPs.
Combined, private equity owners alone extracted £1.2billion from the retailer in the years before its demise.
MPs claim the businessmen soaked up millions from the company, despite being aware of its struggles.
Dame Margaret Hodge, former chairman of the Commons public accounts committee, said: “The companies involved in the consortium have made profits in an immoral way.”
Neil Coyle, a Labour member of the work and pensions committee, said: “The consortium made the company more of a risk, took wealth out of Debenhams and made huge gains.”
Coyle said the protection fund “should not be left to pick up the cost of the pension scheme when those partly responsible [for the collapse] have walked away with millions”.
Debenhams was owned by private equity between 2003 and 2006 and during that time was loaded with £1.1billion of debt to pay for the takeover.
The company had battled administration and bankruptcy before eventually being bought out by online retailers Boohoo for £55million in January.
The chain, which first opened in Wigmore Street, London in 1778, shut its last remaining 12 stores a fortnight ago, officially taking it online-only.
It came two years after the company announced its largest ever pre-tax loss of £491million and the closure of up to 50 stores putting 4,000 jobs at risk as it tried to manage is growing debt.
Debenhams fell into the hands of its lenders, a group of banks and hedge funds led by US firm Silver Point Capital and in April 2020 it went on the market.
At the time, the business had lost £323million in the six months to October - versus billions in its heyday.
This week, former staff at Debenhams stores in Ireland approved a compensation arrangement after launching a 400-day protest in calls for a fairer redundancy package.
The pay deal affects 2,000 former workers at 11 stores.
Without warning, Debenhams closed its 11 Irish stores in April last year amid the first Covid lockdown, resulting in the loss of around 2,000 jobs.
The ex-workers, who have received only their statutory entitlements from their social insurance, claim they were laid off by email, with no notice and no redundancy after decades of service in many cases.
They claim the UK-based retailer broke the terms of a 2016 agreement to pay workers two weeks’ statutory redundancy plus two weeks ex-gratia, per year of service, in the event of redundancy.
