£9m pension payment saves Toys R Us . . . for now

TOYS R Us has avoided collapse by agreeing to stump up almost £10m for its pension – but its future remains in doubt.

In an eleventh-hour deal, the UK’s biggest toy shop chain has agreed to pay £9.8m into its retirement pot, and in doing so has staved off the threat of it going in to administration three days before Christmas.

A collapse would have put at threat 3,200 jobs and 105 stores.

Toys R Us had been plunged into crisis after its US arm went bankrupt. That pushed the UK business, which has a pension black hole of £30m, to the brink.

Experts said that a deal between the firm and pensions regulators sends a strong message to other companies that they must take seriously the futures of their employees and their retirement pots.

But some have raised concerns that the deal will only postpone the pain for Toys R Us, and that it was likely to carry on struggling in the face of competition from online rivals like Amazon.

Despite the pension deal, as many as 800 people are still set to lose their jobs in the spring. At least a quarter of Toys R Us’s 105 shops will shut.

The company, which suffered losses of £673m in the year to January 28, will now trigger a process called a company voluntary agreement (CVA), allowing it to close its most unprofitable stores and potentially save millions of pounds a year. It needed approval from the Pension Protection Fund (PPF), the UK’s pensions lifeboat for ailing companies, which said it would vote against the plans unless Toys R Us paid £9m into its £30m pension black hole.

The firm has now agreed to pay £3.8m into its pension deficit in 2018, with a further £6m promised over 2019 and 2020.

The PPF has also allowed Toys R Us to reduce its pension deficit recovery plan to 10 years down from 15. The concession meant 98pc of Toys R Us creditors voted in favour of the CVA.

Former pensions minister Baroness Ros Altmann said the deal showed lessons had been learnt from the collapse of BHS, where the PPF had to force bosses to honour pension promises.