Green's peace offer: up to 50 million pounds a year into Arcadia's pension fund

Sir Philip Green’s offer has been understood in the industry as a “peace offering” aimed to put an end to months of bitter internal disputes in his fashion empire. The fashion mogul has agreed to invest as much as 50 million pounds per year into the Arcadia’s pension fund.

Following the deal, Arcadia – which owns Topshop, Dorothy Perkins and Miss Selfridge brands - will double payments into its pension scheme from 25 million pounds a year to 50 million pounds this year. The increase in contributions from Arcadia has been agreed with the pension’s trustees. The Pensions Regulator has also been made aware of the deal, although it does not have to sign off the agreement.

As reported by ‘The Telegraph’ in its Sunday edition, Green’s ultimate goal is to plug a growing deficit, just days after reaching a settlement over the BHS pension scandal. Earlier this month Sir Philip – main shareholder in the company – injected 363 million pounds out of his pocket to cover most of the pension promises made to former workers of BHS.

It’s worth recalling that Arcadia’s pension deficit was accounted as 190 million pounds in the company’s accounts for the year to August 2015. Sources quoted by the ‘Telegraph’ point out that the group’s pension’s debt would have grown substantially since then.

To this point, the ‘Financial Times’ highlighted Sunday that bond yields have fallen since the summer, increasing the actuarial valuation of future pension payments without necessarily producing a similar movement in the assets used to meet them.