The collapse of the Arcadia Group – owner of retailers such as Topshop, Burton and Miss Selfridge among others – is a blow to the 13,000 staff who worked there.
The news comes at a time when businesses are reeling under the impact of the global pandemic and many people have been forced to cope on reduced incomes. However, there is more to the Arcadia situation than job losses. The loyal workers who are members of the group’s pension scheme are set to take another hit.
Estimates suggest that around 10,000 people are due a pension from the group’s defined benefit scheme, which decrees that workers receive a proportion of their salary for every year they have worked.
Most companies have closed down that type of pension scheme because the costs were unsustainable, which is the very problem Arcadia appears to be facing. The company doesn’t have enough cash to pay all the future pensions, according to estimates from pensions consultant John Ralfe, who says the shortfall could be covered by payments from the owner or by selling properties.
There’s also a government-backed scheme called the Pension Protection Fund that guarantees to keep paying a full pension to anybody who has already retired. However, anyone who is still working may get as little as 75% of what they were expecting.
Meanwhile, employees who joined the group pension scheme more recently will have even fewer guarantees, although they do have more flexibility in terms of their pension options.
It can be a minefield, but fortunately anyone needing help with retirement planning in Chester can benefit from the many years of experience we have here at Hartey Wealth Management.