“I have today made a voluntary contribution of up to 363 million pounds, $451 million at current exchange, to enable the trustees of the BHS Pension schemes to achieve a significantly better outcome,” than what the Pension Protection Fund would have offered, Green said Tuesday.
He stressed it was his “goal from the outset” to find a solution to the problem that generated a slew of negative headlines and saw Green dragged in front of a parliamentary committee last summer.
Green admitted to having had “lengthy, complex discussions with the Pensions Regulator and the PPF, both of which are satisfied with the solution that has been offered.”
The Pensions Regulator, which oversees work-based pension schemes in the U.K., confirmed the cash settlement with Green and said the retail tycoon, who owns Topshop among other businesses, will provide funding for a new, independent pension scheme.
It will give pensioners the option of the same starting pension as they were originally promised by BHS, and higher benefits than they would get from the Pension Protection Fund, an industry safety net supported by the businesses themselves. The PPF would have paid BHS pensioners significantly less than what Green has offered, and the move would have drained its coffers.
Alan Rubenstein, chief executive officer of the PPF, said the settlement for the BHS pension “relieves the PPF’s levy payers of the cost of meeting the initially reported shortfall. The Pensions Regulator will be monitoring the new scheme and members will be protected by the PPF.”
Green said all relevant notices, “including legal matters and claims” have been withdrawn, bringing the whole episode to a conclusion.
“Once again, I would like to apologize to the BHS pensioners for this last year of uncertainty, which was clearly never the intention when the business was sold in March 2015,” Green said.
“I am also happy to confirm that any of the pensioners that have faced cuts over the last year will now be brought back to their original BHS starting level pension and will all be made whole. I hope that this solution puts their minds at rest and closes this sorry chapter for them.”
Green had long said he was working hard to “sort” the BHS pension deficit, which had swelled to 571 million pounds, or $695 million, by the time BHS collapsed under its new owner Dominic Chappell, a twice-bankrupt former race car driver with zero retail experience.
Green had sold the ailing retailer to Chappell and his consortium for 1 pound, or $1.50, in 2015. By the time BHS was wound down last spring, some 11,000 jobs were lost and 20,000 pensioners were left wondering how much they were going to be able to collect — and who from.
A parliamentary investigation and hearing followed, during which Green, Chappell and others gave some colorful testimony, and Green was forced to answer questions about why he sold to Chappell, why the pension fund ballooned and why he banked so many dividends in the early years of his ownership of BHS.
Following the investigation, the Work and Pensions, and Business, Innovation and Skills Committees, described the BHS debacle as “the unacceptable face of capitalism.”
The committees insisted the breaches were ethical rather than criminal, and no charges were filed in relation to the case.
Following the investigation, British members of parliament agreed that Green should be stripped of his knighthood, although their decision is not binding. Green’s knighthood was an honor granted to him in 2006 by former Prime Minister Tony Blair for services to retail.
Green had publicly and repeatedly apologized for the debacle, and insisted he and his team were continuing to work with the Pensions Regulator to find a solution.
Following the parliamentary findings, the directors of Taveta Investments, the holding company for Green’s retail businesses, released an independent report drawn up by two law experts. The Taveta report called the parliamentary inquiry process “unfair,” and its findings “inaccurate and distorted.”
News of the deal comes nearly four months after the Pensions Regulator rebuffed Green’s initial offer to plug the gap. Although the Pensions Regulator did not specify how much it had demanded of Green in November, the BBC said the figure was 350 million pounds, or $430 million, while Green had offered 250 million pounds, or $307 million. Neither Green nor the regulator would confirm those numbers.
Lesley Titcomb, ceo of the Pensions Regulator, said the Green agreement “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.”
Titcomb also confirmed that the regulator’s anti-avoidance enforcement action against Green and Taveta Investments will now cease, although it confirmed that enforcement action continues in respect of Chappell and his consortium Retail Acquisitions Ltd.