Arcadia, the collapsed retail group behind Topshop and Dorothy Perkins, has a lucrative pension fund that has been paying former executives up to £1million a year, The Mail on Sunday can reveal.
The £400million scheme – which was set up in the 1970s and is now falling into the hands of the Pension Protection Fund – has been paying the vast sums to former bosses who worked at the company under Sir Ralph Halpern, once dubbed ‘the Naughty Knight’ after reports emerged of a fling with a 19-year-old model.
Sources said Halpern, who is believed to be the biggest beneficiary of the final-salary-style scheme, is among dozens of former directors and senior managers who have received large sums.
Huge rewards: Ralph Halpern in 1992 with then wife Joan after the payout
Others are understood to include his right-hand-man and successor Laurence Cooklin, who left the business just 15 months after Halpern, and former joint-managing director Paul Plant.
Thousands of Arcadia shop staff face an uncertain future, including possible cuts to their pensions from its main scheme, following the collapse of the chain last week.
Arcadia’s senior executives’ pension plan only closed to future accruals by members still employed by the group in 2010.
Several sources told The Mail on Sunday that the board of Burton Group, as it was then known, pulled the plug for new members in the 1990s under a clampdown on platinum-plated perks. About a decade later, the group was bought by Sir Philip Green.
Under Halpern’s tenure, Burton Group – which at the time owned Topshop, Topman, Principles, Debenhams and a host of other brands – became well-known for richly rewarding its executives.
The heady lifestyles of the top brass also drew media attention – not least that of Halpern, who hit tabloid headlines when stories emerged of a relationship with model Fiona Wright. He was subsequently branded Ralph ‘five-times-a-night’ Halpern.
He joined Burton Group as a trainee in the early 1960s and rose to chief executive in 1978 in what became a legendary tenure.
A combination of his flair and a surging consumer economy saw the group reach 60,000 staff employed in almost 3,000 stores at its peak during the 1980s.
Halpern left in 1990 at the age of 52 with a pension of £465,000 a year, which was due to kick in only a few years later.
Now 82 and living in Miami Beach, Florida, he is receiving an estimated £1million a year once annual inflation-linked rises over the years are taken into account, sources said.
It is believed that some of his lieutenants have reached payments of at least half that, following increases linked to the retail price index measure of inflation.
In 2016, the Arcadia Group Senior Executives Pension Scheme had future liabilities of £411million, though the figure is likely to have fallen since then.
Pension funds are not obliged to reveal information on their members but one former executive source estimated there could still be up to 200 members, although estimates vary. Arcadia and the PPF declined to comment.
That contrasts to liabilities of £871million for the main fund, which has about 10,000 members.
It is unclear whether any of the executives in the scheme have ‘cashed out’ their funds in the past two years – agreeing to take out a lump sum in lieu of future payments – or even whether there is an incentive to do so.
But sources told The Mail on Sunday that a number of Halpern’s inner circle are still drawing payments.
The Pension Protection Fund – a ‘lifeboat’ scheme set up by the Government in 2005 – is obliged to pay out obligations in full to pensioners who are already drawing a retirement income.
The situation is very different for those who have not yet retired, who could face a painful cap in future payments. If Arcadia’s main pension fund has to be rescued by the PPF, staff will receive no more than 90 per cent of benefits they have accrued. As of April 1 this year, that 90 per cent payout was capped at £41,461 a year for someone taking their pension from age 65.
The deficit across both Arcadia funds stands at about £300million after a £50million payment by Lady Green, the ultimate owner. There is also a guarantee on part of Arcadia’s property. The gap could close further if a sale of Arcadia is successful, potentially topping up the funds.
Lurid: A tabloid newspaper in 1987 revealed Sir Ralph Halpern’s second mistress
The Mail on Sunday spoke to a dozen executives who joined Burton Group and Arcadia since Cooklin’s departure.
They confirmed it had been decades since new members had joined the senior executives scheme and that they were not members. One former high ranking executive said: ‘I wish I was’ – referring to its phenomenal perks. Another described it as a ‘gold-plated gravy train’.
One source added: ‘The PPF was obviously not set up to settle some of these huge pension payments that are being handed out by this sort of executive scheme.’
Halpern’s tenure at Burton Group – which demerged from Debenhams in 1998 and became Arcadia – was well known for the lavish rewards and the lifestyles of its executives long before the arrival of Sir Philip Green, who later awarded his family a £1.2billion dividend in 2005.
The pension paid to Halpern drew criticism when his departure settlement emerged along with details of a £2million golden goodbye payout when he left the company after its profits fell.
The arrival of Sir John Hoskyns in 1990 – a businessman and political mover and shaker who rubbed shoulders with Margaret Thatcher – drew a line under some of the excesses of the group including curtailing new membership of the senior executives scheme, one former executive confirmed.
In 2005, Halpern appeared unabashed – even insisting that executive pay had fallen too far. In an interview with The Times newspaper, he said pay packages should be improved to stop the flight of talent from Footsie firms to private equity-owned companies, which would hamper their success and short-change shareholders and pension funds.
Sir Ralph Halpern and his former board could not be reached for comment.