The Pensions Regulator is looking at whether the owner of British Home Stores will have to plug holes in the collapsed retail chain’s pension fund.
Yesterday (25 April) the group officially went into administration, after 88 years of business, putting 11,000 jobs at risk.
It has been rumoured the regulator is considering whether Sir Philip Green, the former owner of BHS, should be made to put more funds into the retailers scheme to fill a pension deficit of half a billion pounds.
A spokesperson for The Pensions Regulator said: “We can confirm that we are undertaking an investigation into the BHS pensions scheme to determine whether it would be appropriate to use our anti-avoidance powers.
“Such cases are complex. There is a clear process that must be followed and this can sometimes take a considerable amount of time. We are unable to provide a running commentary on case investigations, or confirm the targets of our investigation.”
Historically, The Pensions Regulator used its powers where the employer has become insolvent in the case brought by the administrators of 20 insolvent companies in the Lehman Brothers and Nortel groups.
Scott Gallacher, director at Leicester-based Rowley Turton, said while final salary schemes are generally the gold standard of pensions, they are not completely guaranteed and the collapse of BHS highlights some of the downsides of these schemes for both members and the business owners, or even former owners.
He said: “Fortunately members benefit from protection via the Pension Protection Fund. The rules are somewhat complex, but retired members generally have 100 per cent of their pension protected whereas those under retirement age generally have 90 per cent protected. This protection can be lower for those who retired early, or had high pension benefits.
“Owners, or former owners, of businesses with final salary schemes should realise that under the Pension Protection Fund they do not benefit from limited liability and may, like Sir Philip Green, find themselves asked to make up any shortfall even after they have sold the business on.
“This underlines the need to exercise extreme caution and due diligence over pension arrangements when buying, or indeed selling, any business.”
ruth.gillbe@ft.com
