Yet another big brand is set to leave to close doors for a final time as rumours abound Toys R Us will finally enter administration within a few days.
The company is said to have had discussions with administrators as thousands of workers face losing their jobs.
The firm also has a troubled pension scheme with members likely to see their retirement savings picked up by the government’s rescue scheme, the Pension Protection Fund.
Although the PPF will safeguard pensions, the security comes at a cost.
The PPF slashes pension payments by 10% and caps annual payments for high earners.
Pension transfer questions in Parliament
Should Toys R Us collapse, the move will call into question the security workers have for their retirement savings in company pension schemes.
The British Toys R Us toppled into trouble after the US firm entered bankruptcy protection in September 2017.
Recently, workers in retail brands British Home Stores, Jaeger and Multiyork have all seen their employers collapse while the standards of advice offered to thousands British Steel workers seeking to transfer their pensions have been questioned in Parliament.
Even the regulators are in confusion over transfers out of guaranteed employer schemes.
The starting place until recently was switching out was never worthwhile, but this advice was destroyed by pension freedoms that were introduced in April 2015.
Massive FTSE100 pension black holes
Pension freedoms apply to direct contribution schemes – not employer direct benefit schemes.
The difference is DB scheme come with guaranteed minimum pensions that are index-linked against rises in the cost of living. In some cases, other extras are bundled in, such as spouse pensions and guaranteed annuity rates.
These are balanced against higher transfer values as an incentive to leave the scheme and the chance to take some or all a pension from the age of 55, compared with 60 or 65 years old for DB schemes.
Many FTSE 100 firms are struggling to maintain their pension promises. BT has a £1.5 billion gap between assets and pension pledges to employees – and BT may be at the end of the line but is not alone.
Big employers like British Aerospace, British Airways and Sainsbury also have massive pension black holes.
