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Mothercare looks to protect its UK pension schemes

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Mothercare wants to transfer the UK pension scheme to international business to maintain benefits for scheme pensioners.

The company is reviewing a deal that will prevent it from putting funds into the UK Pension Protection Fund (PPF).

When the pension system enters the industrial funding lifeboat, it means future retirement benefits will be reduced.

This is because the troubled retailer was officially set up to appoint a manager to the UK business.

The administrative move put 2,500 jobs at risk. Mothercare said 79 UK stores could not achieve a sufficient level of profitability and so far did not find buyers.

The company has two employee pension schemes, between which there are nearly 6,000 members. We are currently planning to transfer these from our UK office.

In the most recent actuarial assessment two years ago, Mothercare's pension scheme amounted to £ 140 million.

This means that if the British forces go bankrupt, the PPF will have to pay retirement benefits.

Mothercare already had one rescue deal, known as the Company Voluntary Agreement (CVA), in May 2018.

CVA is a bankruptcy procedure that allows a company to enter into a contract with a creditor to repay all or part of its debt. In the process, the chain was able to close 55 stores.

While waiting for the CVA's approval, these two pension schemes temporarily entered the PPF, but left a few months later.

UK pension regulators keep up with the latest developments.

The transition to Mothercare's administration takes place as High Street retailers continue to face tough times due to pressure from consumer incomes, growth in online shopping and rising costs of staff, rent and business costs.

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