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John Lewis, Arcadia and Pentland could face greater scrutiny

John Lewis Partnership, Arcadia and Pentland Group are among the private fashion retailers and brands facing greater scrutiny from the Financial Reporting Council (FRC) Corporate Governance Code, under new proposals by a group of MPs.

The firms are among the 30 largest UK private companies and have defined-benefit pension schemes in deficit, according to new data. Other large firms which do not have defined-benefit schemes but could face more scrutiny include New Look, Matalan and River Island.

The work and pensions select committee has called for large private companies that have more than 5,000 defined benefit pension scheme members to comply with the FRC Corporate Governance Code or publicly explain why they are not, following the demise of BHS and the ongoing wrangling over its significant pension deficit.

The committee did point out that many large private companies already follow best practice on transparency.

The Pensions Regulator analysed the health of defined benefit pension schemes of both large private and FTSE 100-listed companies and found large private companies represented a greater risk to the Pension Protection Fund than their publicly-listed counterparts.

It found the pension schemes of FTSE 100 firms were 89% funded, compared to 82% for large private firms.

Frank Field, chair of the work and pensions select committee, raised “grave concerns” about the £190m pension deficit at Arcadia and the reluctance of the company or its trustees to disclose more detailed information on the schemes.

 Latest performance Pension balance for reporting period ending
Company Year end Profit £m Staff 2014 £m 2015 £m 2016 £m  
John Lewis Partnership Jan-16 784 90,700 -1,003 -1,249 -942  
Arcadia Group Aug-15 320 32,541 -125 -190 x  
Pentland Group Dec-15 265 20,588 -31 -29 x  
New Look Retail Group Mar-16 227 18,530 x x x  
Matalan Feb-16 56 15,500 x x x  
Clarks Jan-16 86 15,379 -86 -22 +75  
River Island Dec-14 174 11,981 x x x  
x - denotes no defined benefit pension scheme for this company      
Company performance and staff numbers from The Sunday Times Top Track. DB pension liabilities from annual account filings at Companies House and are the net liability (fair value of scheme assets minus present value of benefit obligations) not taking into account any related deferred tax asset

He asked: “Does Sir Philip not want us to know that he was being relatively generous to the Arcadia schemes while the BHS schemes floundered and the company headed inexorably for insolvency? Was he neglecting both?

“It can’t be right that basic information like the schedule of employer contributions and the length of the recovery plan is not in the public domain,” he added. “If it goes under then levy-payers and pensioners foot the bill.”

 

 

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