Arcadia pension deficit balloons to almost £1bn

Sir Philip Green’s retail group, which owns businesses including Topshop, Dorothy Perkins and Miss Selfridge, is facing a combined shortfall of £993m across its two pension schemes – one for senior executives and one for other staff.

Documents released yesterday by the Work and Pensions Committee investigating the demise of BHS – previously owned by Green – said Arcadia’s deficit reached that level in March last year, on a buyout basis.

The £993m valuation is based on the estimated cost of winding up the scheme and securing benefits with an insurer.

On an ongoing concern basis, the shortfall stood at almost £565m when the official revaluation was carried out in March last year.

That marked a steep increase from £455.8m at the time of the last revaluation in 2013.

Details of the scale of the deficit emerged a month after Green pledged to double annual pension fund contributions to £50m in a bid to plug the black hole over the next decade.

Contributions will rise to £54.5m per year from August 2019.

The move came days after Green agreed to pay £363m into the BHS pension scheme to resolve that deficit.

The department store business tumbled into administration a year after Green sold it to the Dominic Chappell-led Retail Acquisitions consortium for a nominal £1.

Frank Field, chairman of the Work and Pensions Committee, described the Arcadia deal as “a credible plan for tackling a giant deficit”, calling it “great news” for Arcadia pensioners.

But he said the deal showed that Green had “favoured” Arcadia over BHS.

In 2012, the tycoon revealed a recovery plan to shore up the BHS pension scheme by agreeing to pay £10m per year over a 23-year period.

One year later, Green said he would pay £24.3m a year into the Arcadia fund over just under 14 years, despite the Arcadia pension schemes having fewer members than the BHS one.

Field said: “It is clear from these figures that Sir Philip was long favouring the Arcadia schemes over their BHS counterparts, which have more members.

“Not long after he refused to shift on a ludicrous 23-year recovery plan for the BHS scheme he agreed a 13-year plan for Arcadia with well over double the deficit contributions.

“I imagine Sir Philip would say that Arcadia could afford it because it was profitable, whereas BHS was not. But it is clear that that all his companies are run as one large tax-efficient empire in the family interest.”