Wilko, the hardware store that has 408 UK branches and employs 12,000 people is in danger of going bust, calling in the administrators as the money to run the business ran out. Staff numbers have fallen from the 20,000 reported in 2020.
Wilko, closed its defined benefit plan (THE WILKO RETAIL LTD. RETIREMENT BENEFITS SCHEME) to future accrual almost exactly 10 years ago. Pension contributions have since been made to People’s Partnership.
Staff numbers have fallen from the 20,000 reported in 2020 and the 23,000 reported in 2013 when Wilko started participating in People’s Pension
Contingent assets in place
The FT reported in January a raft of measures to support the business and that
In a separate agreement the trustees of Wilko’s defined-benefit pension scheme have been granted security over a freehold distribution centre in Wales. The latest accounts show the scheme had a deficit of about £15mn.
It has around 2200 members of whom just over 700 are pensioners. Its actuaries and administrators are thought to be Capita and as at Feb 2020, it had around £185m in assets and is run out of Wilko’s head office in Worksop.
Wilko , its customers and its staff.
Since the demise of Woolworths, Wilko has become the next best thing. It is now the home to the pick and mix and judging by an overnight phone in, it is a place people go to meet each other. A friend of mine calls it “Woolco”.
It is one of the few remaining fixtures on the high street, though the retail experts in my family have been saying for some time , they can’t understand how it competes against the internet and Poundland. It’s website calls the company and staff a “friendly place”.
It’s loss will be felt hardest by its staff but hard too by its customers, as happened at Woolworths. Inevitably it will attract comparisons with BHS- but there are no pension issues here. A £3m dividend was paid in 2022 but this is not on the scale of Philip Green’s plunder.
The defined benefit pension scheme is small relative to the workforce. It has charge over company assets and will compete for what remaining cash it can. In 2020 it looked to have around half of its assets in an LDI program. Investments are under fiduciary management.
Like many small schemes , it now has the weakest of covenants and would normally head for the PPF. However, the recent increase in interest rates may have created opportunities for it to eventually find a home with a consolidator offering a better deal and no doubt the Pensions Regulator is already in discussion with the trustees about their options.
But while the focus of the pensions industry will be on the old final salary scheme, the focus of almost all the staff will be on their own jobs and to a much smaller degree on the pension contributions and other benefits those jobs offer.
The final salary never seems to have been an inclusive arrangement, at its closure it appears to have covered around 10% of staff. Auto-enrolment looks like a big deal for the other 90%. Wilko is a classic example of an employer democratizing its pension contributions while being haunted by the shadow of past pension promises. Those 1500 awaiting the commencement of their pensions promised by the Wilco pension will be anxious right now.
People’s partnership will also be concerned. Wilko was an early staging client who seemed to have joined its master trust to coincide with auto-enrolment. Sadly , many of the small pots , managed for Wilko employees, look likely to stay small pots.
What can be done?
Businesses like Woolworths, BHS, Debenhams and now Wilko play a large part in the lives of those who still physically shop and use shopping as a means to meet people. There are already calls for Government intervention, the Government can no more intervene to save Wilko as it could the others.
The jobs and the pensions of the 12,000 shop workers look no more secure than those at other collapsed chains. Indeed the RAA that was put in place to protect BHS now looks an anachronism. . The company has already pawned many of its asset to corporate restructuring group Hilco and its new CEO , Mark Jackson, looks destined to be its last, at least as a company owned by the Wilkinson family.
Perhaps a deal can be done to provide the trustees with a secondary sponsor and a Capital Backed Journey Plan, but that would be of little benefit to the current workforce who face an uncertain future and a diminished pension.