Arcadia collapse: what it means for 10,000 staff pensions

Thousands of former and current staff of Arcadia face cuts to their expected pensions following the collapse of fashion retail group Arcadia.

After the group’s administration on Monday night, its two pension schemes, with around 10,000 members, will be assessed by the industry lifeboat fund

FT Money addresses key questions about the implications of Arcadia’s collapse for the retirement prospects of its employees and pensioners.

What will happen to my pension now?
When businesses with a defined benefit, or final salary-style, pension scheme enter administration, this triggers intervention by the Pension Protection Fund, the industry lifeboat scheme.

The PPF will now take a close look at the Arcadia pension schemes to check they meet funding criteria to be covered by the lifeboat. Before Arcadia went into administration, the funding shortfall for the schemes was estimated at about £350m by John Ralfe, an independent pensions expert. 

The Pension Protection Fund said: “Insolvency events are a concerning time for employees and scheme members and we want to assure the members of Arcadia’s defined benefit pension schemes of our ongoing protection.”

The PPF added that “robust” negotiations during a rescue package for Arcadia last year had ensured that both of its pension schemes were now in a “better” financial position. Under the rescue deal, hammered out with the trustees, the regulator and the PPF, Arcadia was allowed temporarily to reduce its annual deficit contributions from £50m to £25m. In return, Lady Green, the ultimate legal owner of Arcadia and wife of Sir Philip Green, the driving force behind the group, pledged £100m of her cash to the schemes, to be paid over several years, and Arcadia assets were offered as security.

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The trustees of the schemes said they are in ongoing discussions with Arcadia and its administrators and are working with the Pensions Regulator and the Pension Protection Fund fully to understand future plans for the business to ensure that members’ interests continue to be protected. 

Arcadia workers who are saving into the company’s defined contribution pension plan, where pension benefits are not guaranteed, will not have their savings affected by the company’s collapse. Savings in defined contribution plans are managed by a pension company and are not underpinned by the employer.

How will going into the PPF affect my pension?
Current and deferred members in the defined pension scheme who are yet to reach normal pension age for the plans will lose 10 per cent of their benefits. Members who had taken their pensions early will also be hit. 

In addition, higher earning members may see their total pension affected as there is a cap on the compensation the PPF will pay. For the current year, the cap is £41,400 for a 65-year-old, which means any expected pension above this threshold will not be paid. This cap was ruled unlawful by the High Court this year, but the government, which sets compensation limits for the PPF, has appealed against this judgment.

Those who have reached normal pension age will continue to be paid their full pensions and not be affected by the cap. However, annual inflation increases will typically be lower. 

If the schemes are found to be in a healthier financial state than expected, there is a chance that the hit to members’ pensions from the company collapse might not be so bad. The pensions lifeboat has been operating since 2005 and already looks after more than 300,000 members’ pensions. It currently has reserves of £6bn. 

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Where can I get more information?
The trustees of Arcadia’s pension plans have urged members to check the pensions website at for updates, phone the member helpline at 01179 420080 or email



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