BHS pension deal ‘could be sorted by Christmas’ as regulator begins legal action against Sir Philip Green
It is hoped a deal can be negotiated outside of formal court proceedings which could take years
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Your support makes all the difference.Regulators rejected Sir Philip Green’s £250m offer to plug the hole he left in the BHS pension scheme, but sources close to the talks told the BBC an agreement could be struck by Christmas.
The Pensions Regulator announced enforcement action against the former BHS owner but it is hoped a deal can be negotiated outside of formal legal proceedings. Experts warn a court battle could take years, leaving thousands of pensioners out of pocket in the meantime.
It is understood the Pensions Regulator quickly turned down Green’s proposal and demanded closer to £350m, while saying the structure of the deal left too much risk in the hands of BHS pension scheme members.
Green proposed creating a new fund for those who wanted to remain in the BHS scheme and said he would buy out those who wanted to leave. The new fund would not be attached to a sponsoring company and so would have less protection than required by law.
If a deal is not reached, 20,000 BHS pensioners will be transferred to the Pension Protection Fund and face losses of at least ten per cent.
Ros Altmann, the former pensions minister, added: “You don’t tell regulators what you believe is the right amount – they tell you.
“If I were Sir Philip, I would take back responsibility for the BHS scheme and manage it on an ongoing basis to find the best way to meet the liabilities over time. But that will be expensive.
“This is what he promised parliament he would do. Putting in a smaller amount than the regulator requires will just mean members stay in the PPF and any extra money goes into the central PPF pot. To pay better benefits will require a bigger amount of money, but it is up to the regulator to decide what that amount should be.”
The PPF, which is funded by a levy charged to company pension schemes, backed the regulator’s announcement.
Alan Rubenstein, chief executive of the PPF, said: “We welcome any steps that may secure more money for the BHS pension schemes. This would reduce the cost falling on our levy payers and may provide the potential for members to receive higher than PPF levels of benefits.”
The BHS pension scheme’s deficit stands at £571m. The high street chain collapsed in April, putting 11,000 out of work.
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