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Pensions watchdog closely monitoring House of Fraser deal

Magnifying glass in front of an open newspaper with paper houses. Concept of rent, search, purchase real estate.The Pensions Regulator is following Mike Ashley’s acquisition of House of Fraser closely after the sale left thousands of staff facing possible cuts to their pensions.

On Friday the retail tycoon’s Sports Direct business agreed to purchase the struggling chain for £90m through a pre-pack administration arrangement.

This is an insolvency mechanism where a company can arrange to sell all or some of its assets to a buyer before administrators are appointed to manage the sale.

The Financial Times reports that because the House of Fraser deal was struck before administrators were selected, its pension liabilities will pass on to the Pension Protection Fund.

That could leave the retailer’s pensioners with reduced benefits since the lifeboat fund usually pays out less to retirees than full scheme benefits.

TPR is looking at the House of Fraser deal given the impact of this on pensions.

During the past several years pension liabilities stemming from collapsed retailers have been the source of intense political scrutiny.

The failure of BHS in 2016 left 19,000 workers uncertain about their future retirement benefits with former owner Philip Green paying £363m cash into the scheme.

Yesterday the Pension Insurance Corporation drew a line under the scandal as it finished a buyout of the scheme set up to take over a portion of BHS’s liabilities after the cash injection from Green.

The sale will guarantee the pensions of roughly 9,000 former BHS staff.

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