LONDON — U.K. parliamentarians plan to invite retail tycoon Sir Philip Green, and others, to answer questions as part of an inquiry into pensions regulation and the private, industry-backed Pension Protection Fund.
The British parliament’s Work and Pensions Committee said its inquiry will also look at “lessons from recent cases, including BHS,” the retailer formerly owned by Green that fell into administration earlier this week.
BHS was placed into administration, the U.K. equivalent of Chapter 11, because it could no longer run its day-to-day operations. As reported, the retailer’s pension fund is suffering from a 571 million pound, or $822 million, deficit.
It remains unclear how and why the deficit reached that level; who will ultimately be responsible for filling the gap, and how the Pension Protection Fund will be impacted if it is forced to foot the bill.
The PPF was established to pay compensation to members of eligible, defined benefit pension schemes when employers declare insolvency or where there are insufficient assets in the pension scheme.
“We need to look at the Pension Protection Fund and how the receipt of pension liabilities of BHS will impact on the increases in the levy that will now be placed on all other eligible employers to finance the scheme,” said Frank Field, a member of parliament, and chair of the committee.
“We will then need to judge whether the law is strong enough to protect future pensioners’ contracts in occupational schemes,” he added.
The parliamentary committee said it intends to invite witnesses including Alan Rubenstein, of the Pension Protection Fund; Lesley Titcomb, of the U.K. Pensions Regulator, and Baroness Ros Altmann, U.K. minister for pensions, in addition to Green. No dates have been announced.
Green was not available for comment at press time.
Earlier this week, the U.K. Pensions Regulator, a government body, confirmed it was undertaking its own investigation into the BHS pensions scheme. It will try to determine whether BHS’s former owners deliberately avoided paying into the pension pot, whether they need to pay money back and, if so, how much.
“Such cases are complex. There is a clear process that must be followed and this can sometimes take a considerable amount of time. When it becomes appropriate to do so we will consider issuing a report of our activities in this case,” they said.
As reported, Green sold the loss-making BHS last year to a business consortium for a nominal 1 pound, or $1.50. He remains one of its biggest creditors. According to British media reports, the new owners extracted millions of pounds from BHS shortly before the company collapsed.
On Thursday, Philip Duffy of Duff & Phelps, the administrators of BHS, said his team has been “working hard to stabilize the business and are pleased to have received a number of expressions of interest. We continue to seek a sale as a going concern.”
He said the BHS stores continue to trade as normal and that staff were paid over the course of Wednesday and today. “We want to reassure them that they will continue to be so whilst the group remains in administration, as a priority payment.”