Mothercare eyes deal to protect UK pension schemes
The retailer filed a notice to appoint administrators for the UK division on Monday, raising fears over the future of its 79 stores.
Mothercare is looking to move the pension schemes for its troubled UK business into its profitable parent group.
The retailer filed a notice to appoint administrators for the UK division on Monday, raising fears over the future of its 79 stores and 2,500 employees.
The company is understood to be finalising a deal to move the pension schemes of its UK employees from the troubled arm as part of a new funding plan to preserve benefits for its scheme members.
Mothercare is in talks with pension trustees over a potential agreement to move the schemes into the global parent group which has continued to trade profitably despite its UK woes.
A deal would stop the funds being placed into the UK Pension Protection Fund (PPF).
If the pension schemes enter the industry-funded support system, it could mean significant cuts to future retirement benefits.
The UK’s Pensions Regulator is understood to have been kept informed about the latest developments, which were first reported by Sky News.
The firm has two pension schemes in the UK, which between them have nearly 6,000 members. The schemes had a deficit of £139 million when they were last valued in 2017.
On Monday, Mothercare said it has undertaken a review of the UK business and found that it is “not capable of returning to a level of structural profitability”.
It said the business is therefore unable to satisfy the cash needs of the UK arm and is therefore filing the notice as part of the restructuring and refinancing process.
In the UK, Mothercare had already closed 55 stores over the past year in a desperate bid to keep the business afloat.
A spokesman for The Pensions Regulator said: “We are holding detailed discussions with the scheme trustees, advisers and the PPF to understand the implications of recent developments and to ensure the interests of members are protected to the fullest extent possible. We will not comment further.”