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The former ultimate owner of discount retail chain Wilko does not expect to have to help plug the high street chain’s estimated £70.2mn pension hole following its collapse a year ago.
Amalgamated Holdings Wilkinson Limited, the ultimate parent of Wilko that is owned by the founding family, said in new documents that its directors, including former chair Lisa Wilkinson, “do not believe there is a liability for AHWL in respect to any [pension] deficit arising” after they sought legal advice.
The statement comes after the UK discount retailer fell into administration last August, making it one of biggest retail casualties in recent years with more than 10,000 job losses.
The UK pensions regulator has been considering taking action against Wilko after it went bust with an estimated £70.2mn pension shortfall, having paid millions of pounds in dividends to Wilko’s founding family over the years. It has the power to pursue owners to plug pension gaps if their actions are deemed to have put pension holders’ savings at risk. It is unclear what the final financial position of the scheme will be.
In the Companies House filings, AHWL acknowledged that the regulator’s powers were “extensive” but it cited several reasons as to why it believed it was off the hook for liabilities.
It said that it “has never been the sponsoring employer for the Wilko pension scheme” and “when periodically asked about dividends, as shareholder, the directors . . . expressed a view that pension contributions be prioritised over dividends” among other things.
It added that the directors believed the scheme was “appropriately and properly funded” especially after the retailer was granted security over £20mn of Wilko property, which is expected to be paid in full, and annual contributions increased from £4.75mn to £8.4mn from 2022. It also said that no dividends were ever paid by AHWL.
Separately, the directors said they “have considered the possibility of a claim or claims against it” more broadly following the administration but “they have received no indication of an actual or potential claim arising from the process to date”.
The family-owned chain started life as a single hardware store in Leicester in 1930, before capitalising on the rise of DIY and expanding to 400 stores. But it faced increasing competition from nimbler rivals in recent years with sales deteriorating and it running out of cash.
Wilko’s assets were sold for parts by administrators at PwC with rivals B&M and Poundland acquiring some stores while The Range bought the brand, website and intellectual property and has been opening new stores under the Wilko name.
AHWL was originally set up as the management vehicle for the owners of Wilko and its subsidiaries. It says its principal activity is to “develop and manage a diversified portfolio of business investments”.
AHWL’s comments come after Lisa Wilkinson, the granddaughter of the company’s founder, was grilled in November by the Commons’ previous business and trade committee over its collapse.
At the time MPs queried why nearly £150mn was taken out of the business over 20 years, including £3.75mn in the year before the retailer’s administration as trading deteriorated, and said AHWL assets could be used to plug the pension deficit.
Wilkinson said that the parent company did not have enough assets, which were mostly tied up in start-up businesses, UK properties and a limited amount of stock market investments anyway.
The Wilko pension scheme could be bailed out by the Pension Protection Fund, the pensions lifeboat scheme. The PPF said the scheme “remains in assessment” and that it was “working closely with the scheme trustees to ensure the best outcome for members”.
A representative for AHWL declined to comment.
The pension regulator said it has engaged with “Wilko, the pension trustees, the administrators and the PPF to make sure members’ benefits are protected”. It added it was an ongoing case and declined to comment further.
