Sir Philip Green has agreed a £363 million cash settlement with The Pensions Regulator (TPR) for the British Home Stores (BHS) pension scheme.
A total of £343 million will be used to fund a new independent pension scheme, and £20 million will be put towards expenses and scheme costs.
The new arrangement, which has the approval of trustees from the two existing BHS pension schemes, will give the 19,000 pension scheme members the option of the same starting pension they were originally promised by BHS, allowing them to gain higher benefits than they would get from the Pension Protection Fund (PPF).
Members of the current BHS schemes will be able to transfer to the new scheme or remain in their existing scheme and receive benefits from the PPF.
Alternatively, members with small pots of up to £18,000 in total value will be eligible for a lump sum payment. Those members who decide to transfer into the new scheme instead of taking the lump sum payment will be entitled to the same benefit structure as other members.
To ensure the governance of the new scheme, its board will consist of three professional independent trustees.
The arrangement closes TPR’s anti-avoidance enforcement action against Sir Philip Green.
Lesley Titcomb, chief executive officer at TPR, said: “The agreement we have reached with Sir Philip Green represents a strong outcome for the members of the BHS pension schemes. It takes account of the interests of both pensioners and the PPF, and brings a welcome level of certainty to present and future pensioners.
“Throughout our discussions with Sir Philip and his team, we have always been clear that we were determined to achieve the right outcome for members of the schemes, both in terms of the amount and the structure of the settlement.”
Nathan Long, senior pension analyst at Hargreaves Lansdown, added: “After months of uncertainty, most members can now look forward to having higher pensions than under the safety net of the Pension Protection Fund.
“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.”
