Scheme members offered lifeline to get better deal than PPF – but staff still face 12% cut in benefits on average
BHS pension deficit at £571m at last valuation, so £208m gap left to plug between assets and liabilities
Deal could act as warning to firms hoping to ditch pension liabilities
Tom Selby, senior analyst at AJ Bell, comments:
“Confirmation of the £363m deal agreed between Sir Philip Green and The Pensions Regulator brings to an end months of stand-off between the two parties. It will also be welcome news to thousands of scheme members who could have been forced to take severely reduced benefits on entering the Pension Protection Fund.
“However, it is worth bearing in mind that while the deal avoids some of the harsher penalties from entering the PPF – including a 10% cut in benefits for those who have yet to retire and a cap on annual payments – many members will still be worse-off than they would have been had BHS not failed. This is inevitable given the scheme’s deficit of £571m is £208m more than Sir Philip has stumped up. TPR says BHS staff will get, on average, 88% of what they would have received under the original terms of the scheme – primarily as a result of cuts to inflation protection.
“This result will be viewed as something of a victory for TPR and acts as a warning shot to any bosses who think that, once they have sold their business, any obligation to pensioners disappears.”