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<p>The pensions framework established by Parliament in the Pensions Act 2004 sets
out that ongoing employers may address the funding of their scheme deficits over a
reasonable period of time. This responsibility falls on the company rather than its
owners, other than where The Pensions Regulator has used its anti-avoidance powers.
This approach of spreading funding of deficits was established to balance the needs
of schemes with those of their sponsoring employers.</p><p> </p><p>The Arcadia trustees
and the Arcadia group took an approach which was similar to many other schemes and
employers in establishing recovery plans to address their schemes’ deficits over a
number of years. In response to a request to vary those recovery plan payments, made
in conjunction with the Arcadia Group’s Company Voluntary Arrangements proposals,
The Pensions Regulator, working alongside the trustees and the Pension Protection
Fund, has negotiated robustly to secure an enhanced package of support for the pension
schemes in connection with a successful Company Voluntary Arrangement, worth significantly
more than would be received if the Company Voluntary Arrangement is not successful
and Arcadia Group Ltd becomes insolvent. This represents appropriate protection, in
challenging circumstances, and is equitable in the context of the wider Company Voluntary
Arrangements process.</p><p> </p><p>In assessing the turnaround plan presented by
Arcadia, The Pensions Regulator has been informed by the analysis carried out by professional
advisers to the trustees. The Pensions Regulator has considerable expertise in restructuring
situations and this includes people in its regulatory teams with a background working
in big chartered accountancy firms and restructuring operations in banks.</p>
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