The U.K. pension fund of Toys R Us Inc. is set to enter another assessment period with the Pension Protection Fund after the retailer's U.K. operations went into administration Wednesday, a spokeswoman at the U.K. lifeboat fund confirmed.
An assessment period by the PPF is triggered for the pension funds as soon as the sponsoring employer enters administration. However, the PPF hasn't yet received a notice, the spokeswoman added. The notice under section 120 of the Pensions Act officially begins the assessment procedure.
In December, the pension fund was already being assessed by the PPF. The company then agreed to pay £9.8 million ($13.7 million) into the plan, starting with £3.8 million in 2018. "We agreed that the pension fund could come out of the assessment in December," the spokeswoman added.
As of Feb. 28, the deficit of the Toys R Us Limited Staff Pension and Life Assurance Scheme, Maidenhead, England, was £38 million. The asset size of the plan could not be learned by press time.
"While this is a disappointing outcome, it is one we protected against in our approach to the (company voluntary arrangement) in December. The first of the additional payments secured by us has been paid; we believe therefore that the deficit in the pension scheme is lower than it would have been if the company had entered administration in December. We will now be working to maximize the recovery to the scheme from the administration. Members of the Toys R Us pension scheme can be reassured that the PPF is there to protect them," Andy McKinnon, acting CEO of the £23.4 billion PPF, said in an emailed statement.
The U.S. parent company filed for Chapter 11 bankruptcy protection in September.
A spokeswoman at Toys R Us declined to provide additional details about the U.K. pension fund. "Toys R Us is focused on creating a viable business plan, which will allow us to emerge from Chapter 11 before the next holiday season," she said.