Toys R Us may not be only struggling company with large pension deficit

The future of Toys R Us in the UK is hanging in the balance ahead of a key vote by creditors over whether to back the firm's rescue plan, but a pensions’ expert at the University has warned it might not be the only struggling company with a large pension deficit.

The Pension Protection Fund (PPF) – which wants the toy retailer to put £9m into its struggling pension fund – has said it will vote against the plan. Failure to agree a deal could put all its 3,200 staff at risk of redundancy.

Professor Paul Sweeting, of the School of Mathematics, Statistics and Actuarial Science, comments that other companies with defined benefit scjemes could face similar issues.

‘Toys R Us is unlikely to be the only struggling company with a large pension deficit, and it is good to see the Pensions Regulator being robust in its defence of pension scheme members.

‘It is particularly important that the Pensions Regulator takes this stance with Toys R Us given the fallout from the collapse of BHS.

‘But it also highlights the risks faced by many defined benefit pension schemes, despite the good news from the Pension Protection Fund (PPF) just last week.

‘The PPF reported that the total deficit of the schemes that it covers had fallen from £194.7bn last year to £87.6bn this December. However, the situation at Toys R Us shows that these figures contain schemes in vastly different states of health.’

Paul Sweeting is Professor of Actuarial Science, having held a number of roles in pensions, insurance and investment. Most recently he was Head of Research at Legal & General Investment Management, before which he was a European Head of Strategy and a Managing Director at J.P. Morgan Asset Management.