BHS - the trustees' view
The BHS Pension Trustees have announced that a financial agreement with Sir Philip Green has been reached which gives members the opportunity to improve the benefits payable compared with the current Pension Protection Fund levels of compensation.
Sir Philip Green has made a voluntary personal cash payment of £343million to enable the Trustees to make offers of improved benefits to all members of the BHS Schemes. Sir Philip has also made available an additional amount of up to £20m towards the costs of implementing the member options and the new scheme.
The settlement will allow all pensioners the option to receive pensions at the full starting level that they were promised by the BHS schemes. Current pensioners who have received lower pension benefits since March 2016 due to the PPF level of compensation being paid will have the opportunity to receive lump sums to make those underpaid benefits whole.
Key features of the new scheme option (Option 1) are:
- Benefits will not be subject to the PPF adjustment to 90% of original scheme levels
- Death benefits will be paid at higher than PPF compensation
- Pensions earned before April 1997 will increase in payment. PPF does not pay increases on these pensions.
- Members will not now be subject to the PPF compensation cap
- Current pensioners will also receive a lump sum to make up for any underpaid pension benefits since 3 March 2016 due to PPF compensation levels having been applied.
As an alternative option, members with a small annual pension may exchange this for a one-off winding up lump sum (Option 2). This sum will be provided on the basis of the new scheme’s level of benefits.
Members also have the option of remaining in the original BHS Pension Schemes which are likely to transfer to the PPF where entitlements will be subject to PPF levels of compensation. (Option 3).
The BHS Pension Trustees have confirmed this deal with the Pensions Regulator, the PPF and Sir Philip Green today, both the scheme assets and the additional sum of money are now under the Trustees’ control.
All members will receive a written communication from the Trustees in the coming days, and the Trustees expect to make detailed offers to pension members in the next three to four months. While this process takes place there is no change to entitlements as members will continue to receive benefits at PPF levels.
Chris Martin, Chair of the BHS Pension Trustees, commented:
“I am delighted to confirm we have reached an agreement with Sir Philip on additional funds. I am equally delighted we are now in a position to confirm that members will be offered benefit improvements, enhanced flexibility, and just as importantly, long term sustainability for their benefits.”
“The PPF has done an excellent job in providing a safety net for members, giving them certainty of pension income since the insolvency of BHS. We have however now reached a final deal which provides long-term certainty combined with the option of improved benefits for members.
“The injection of cash from Sir Philip puts the new scheme on a stable footing. The Trustees have carefully considered all aspects of the deal and we are confident that this is a robust scheme that delivers improved and sustainable benefits. We are now focused on communicating with members to initially outline the options that will be made available so that they are aware of the next steps and are able to make informed decisions at the appropriate time.
“I want to thank Sir Philip, the Pensions Regulator and PPF for their efforts over the last year and am pleased that this agreement delivers for all members.”
BHS Pension members with questions about their entitlements and the next stages of the process should contact:
Telephone: 0333 555 0805