Sir Philip Green’s Arcadia Group risks pension row with £25m funding cut proposal

Sir Philip Green's Arcadia Group has proposed cutting the £50m it pays into its pension scheme in half in a move that risks igniting a new pensions row. 

Arcadia, which owns high street retail brands like Topshop, has internally discussed plans with advisers to cut retirement contributions to £25m as it looks to restructure its financial operation, according to Sky News. 

The plans would also likely see dozens of stores closed, but the proposal, which was made by the company's advisers to its pension trustees and the Pension Regulator, will likely be controversial. 

The pension scheme currently has a deficit of around £550m on a conventional funding basis, and £750m on a full buyout basis, Sky News claim.

Arcadia chief executive Ian Grabiner is heading up the plans that would affect thousands of the retirement scheme's members, while it also proposes to change the annual payments uplift measurements from RPI to the lower CPI measure, which would remove millions of pounds of the current deficit.

The move comes as part of a wider restructuring that will also likely see the company, which owns other high street retailers like Dorothy Perkins and Miss Selfridge, close a number of stores and cut rent costs through a company voluntary agreement.

After the news that Arcadia would be implementing a CVA last month, the firm said: "Within an exceptionally challenging retail market and given the continued pressures that are specific to the UK high street we are exploring several options to enable the business to operate in a more efficient manner.

"None of the options being explored involve a significant number of redundancies or store closures.

"The business continues to operate as usual including all payments being made to suppliers as normal."

It is just two years after Green had to commit £363m to a retirement pot for thousands of former BHS workers following the store's closure.