Struggling Mothercare moves to protect pension schemes
today Nov 5, 2019
Mothercare is trying to prevent its two UK pension schemes from entering the Pension Protection Fund after it was revealed it will call in administrators.
In a bid to protect the UK employee pension schemes, the company is looking at moving them from the UK subsidiary to its parent business, which is not covered by the administration.
The combined schemes have nearly 6,000 members, who would see their future retirement benefits shrink if the schemes enter the industry-funded lifeboat. The Pension Protection Fund typically only pays members up to 90% of what they are expected to receive.
According to the most recent valuation, Mothercare’s pension schemes had a £140 million deficit two years ago.
Mothercare’s attempt to safeguard the savings of its employees comes shortly after it was revealed it will place its UK business into administration. The company has yet to formally appoint administrators, but about 2,500 jobs could be lost if it fails to find a buyer and restructure the business.
Speaking about the latest development, Dan Mindel, managing director at Lincoln Pensions, a covenant advisory business, said: “Transferring its two employee pension schemes from the UK subsidiary to the group parent company, would certainly be a good outcome for the scheme, especially since the group owns the profitable overseas part of the business.
“The pensions industry in general will also be pleased to see members of a retail sector scheme achieve a better outcome than the PPF."
Copyright © 2019 FashionNetwork.com All rights reserved.