The BHS pension scheme has paid more than £14m into the Pension Protection Fund since 2006, including a levy of £5m this year, according to a letter published by the work and pensions select committee.
That compares to the £275m that the PPF – the collective insurance policy for members of defined benefit schemes – has said it may have to fork out to plug the £571m hole left in the pension following the collapse of BHS in April.
The publication of the letter on Tuesday (24 May) coincided with news reports that the PPF was pressuring BHS’ administrators Duff & Phelps to “line up the liquidators” so that any remaining assets belonging to the company could be realised.
The PPF declined to comment on the report.
In its letter to the select committee, the PPF disclosed the vast majority of the £14m was paid after 2012.
Between 2006 and 2012, the scheme contributed less than £2m, or around 15 per cent of the total levy payments.
The PPF calculates a pension schemes’ levy based on how well-funded the scheme is, and the insolvency risk of the sponsoring company.
The less able the scheme is to meet its obligations to members, the more it has to pay into the PPF.
However, an underfunded scheme can reduce its levy by putting up a “certified asset” against failure.
The PPF said in its letter that Sir Philip Green’s Arcadia – former parent company of BHS – took advantage of this rule, putting up one of its other businesses, Davenbush, as a certified asset.
This saw its levy halve from around £400,000 in 2010 to 2011, to £200,000 in 2011 to 2012.
However, when Arcadia did not put Davenbush up as a certified asset in 2012 to 2013, its levy leapt twelvefold to £2.5m.
It also attracted the attention of The Pensions Regulator.
The PPF told FTAdviser currently 5,945 schemes pay the levy. In 2016 to 2017, the PPF expects to raise £615m in levy payments.
That would put the average (mean) levy payment at just over £100,000.
This year the BHS scheme is liable for 50 times that.
Currently the BHS scheme is in the top risk band - level 10 - of levy payers.
The majority (65 per cent) of schemes are in the bottom five bands, with 29 per cent in level one.
The select committee is currently investigating what led to the collapse of BHS and its pension scheme’s subsequent deficit crisis.
On Monday (23 May) it emerged Goldman Sachs had informed Arcadia that Dominic Chappell, the man who bought BHS off Arcadia for £1 in March 2015, had been bankrupt several times and lacked retail experience.
Sir Philip Green himself is due to appear before the select committee in June.
james.fernyhough@ft.com
