Sir Philip Green has been urged not to use coronavirus as an “excuse” to stop payments into the Topshop retirement scheme, according to a pensions expert who called on the billionaire’s Monaco-based wife, Tina, to plug any shortfall.
Arcadia Group, the parent company of the Green family’s retail empire, is planning to halt cash injections into the firm’s pension fund, as it seeks to conserve cash to survive the coronavirus crisis which has devastated retailers.
But John Ralfe, who has previously advised MPs investigating the collapse of Green’s defunct retail chain BHS, said there was no reason to leave the scheme “short-changed”.
Arcadia’s plan involves postponing payments that were agreed with the Pensions Regulator last year as Green sought a company voluntary arrangement (CVA), a controversial form of insolvency, to keep the retail group afloat.
The regulator and pension trustees agreed to allow the company to halve contributions into the Arcadia scheme from £50m a year to £25m, in exchange for Tina Green pledging to put in £100m to make up for the shortfall.
The deal involved Lady Green paying in instalments of £25m a year from her own wealth, plus an extra one-off £25m payment.
While Philip Green chairs the business, it is owned by Tina Green, based in tax-free Monaco. The Green family took a £1.2bn dividend from the company in 2005, while Tina Green was paid £25m by the retail group in 2017.
While Arcadia plans to suspend the company’s immediate contributions to the pension scheme, it said payments from Tina Green would continue and would arrive on time.
But Ralfe said the company could avoid suspending any pension contributions during the coronavirus crisis if she agreed to bring forward the £100m in contributions rather than staggering them.
“If Arcadia wants to delay its payments to conserve cash flow, then Lady Tina should bring forward her payments so the pension scheme gets the same amount,” Ralfe said.
“Given Lady Tina’s significant net worth, the Pensions Regulator must ensure that coronavirus is not an excuse for the Arcadia pension scheme to be short-changed.
“The latest Arcadia annual report at August 2018 shows a £138m deficit – £931m assets and £1.069bn liabilities, which today will be around £90m, given deficit contributions and other movements.
“If Arcadia were to enter administration the deficit would be much higher at £350 to £400m.”
Ralfe has previously advised a parliamentary committee examining the demise of department store BHS, which Green sold for £1 to former bankrupt Dominic Chappell. Following an outcry from MPs and the public, the billionaire eventually agreed to pay £363m to prop up the collapsed company’s pension scheme.
Arcadia declined to comment.