Philip Green stumps up cash to rescue BHS pension fund

Sir Philip Green has agreed to personally pay £363m to rescue the BHS pension scheme from the Pension Protection Fund.

In a deal agreed with the Pensions Regulator in return for severing all future liabilities for the scheme, the retail magnate has made a cash payment of £363m.

BHS collapsed into administration almost a year ago after Green had sold the department store chain to Retail Acquisitions, a company owned by former bankrupt Dominic Chappell, leading to the loss of 11,000 jobs and leaving a £571m pension deficit.

Green's offer is 100% cash, with the 19,000 scheme members given the choice of taking a lump sum if the pension is below £18,000, making a transfer into a new pension scheme providing benefits in excess of the PPF, or have benefits retained and paid by the PPF.

“We are confident that the agreement we have reached with Sir Philip represents a good outcome for current and future BHS pensioners, and, as such, our regulatory action will now cease,” said Nicola Parish, executive director for frontline regulation at the Pensions Regulator.

The regulator had launched legal action against Green last year to try and force him to contribute cash to the scheme.

In a statement, Green said: "I have today made a voluntary contribution of up to £363m to enable the trustees of the BHS Pension schemes to achieve a significantly better outcome than the schemes entering the Pension Protection Fund, which was the goal from the outset."

BHS pension trustees chair Chris Martin was very happy with the result, saying: "The injection of cash from Sir Philip puts the new scheme on a stable footing" and that while not perfect it was better than the PPF.

MP Frank Field, one of the leaders of the parliamentary investigation into BHS, welcomed the settlement, saying that it was "an important milestone in gaining the justice for BHS pensioners and former workers that we have been pushing for since beginning our inquiry into the downfall of BHS".

Challenges remain

Pension analyst Nathan Long at Hargreaves Lansdown said most scheme members can now look forward to having higher pensions than under the safety net of the Pension Protection Fund, with an element of inflation proofing on their pension accrued before 1997 as it will now increase at a fairly healthy 1.8% per annum, whereas there are no increases under the PPF compensation.

"The announcement is not without its challenges. It appears members will have to elect to transfer to the new scheme to get the better benefits.

"Many will elect to do this, but the challenge is contacting all the former employees many of whom may have changed address and be hard to track down."