The Pensions Regulator (TPR) learnt about Sir Philip Green’s sale of BHS for £1 in 2015 “in the newspapers” after it had happened, the body’s chief executive Lesley Titcomb told the work and pensions select committee.
Speaking on Friday (6 May) afternoon, Ms Titcomb’s admission prompted one committee member to accuse the company’s owners of having “a marked lack of respect” for the regulator, but also to suggest the regulator did not instil enough fear in the companies and schemes it regulates.
Ms Titcomb said she did not know whether or not the BHS pension scheme’s trustees knew of the 2015 sale before it happened.
The comments came in a wide-ranging hearing that was often hampered by the regulator’s refusal to go into particulars that might compromise its own investigation into the store’s pension scheme, which has been left with a £571m deficit following the collapse of BHS.
However, Ms Titcomb did reveal the regulator’s own anti-avoidance investigation into the BHS scheme began in March 2015, immediately following the sale to Retail Acquisition, and is expected to conclude by the end of this year.
Ms Titcomb was asked why the regulator agreed to a recovery plan proposed by the scheme in 2012, that took 17 months to draft, and that lasted an unusually long 23 years.
“Recovery plans of 23 years or more are very atypical,” she answered. “The majority are between seven and 12 years.” However, she said the regulator prefers to give a business time to strengthen itself rather than rush it into repairing its pension scheme sooner than it can afford.
“DB pension is a long-term business, and you have to take a long-term view,” she said.
On the subject of governance, Ms Titcomb said, “The whole system is very, very dependent on the calibre of trustees,” adding that The Pension’s Regulator does not have power to approve new trustees.
Earlier, the committee heard evidence from Alan Rubenstein, chief executive of the Pension Protection Fund.
Mr Rubenstein said the PPF, which has now taken over control of the BHS pension scheme and will likely have to plug its £571m deficit, prefers recovery plans to last no more than eight or nine years.
He described the BHS scheme’s 23-year recovery plan as “rather ambitious”, adding: “So I think one of our concerns would be for the committee to think whether or not there ought to be some natural limit.”
He went on: “It’s clear that I would like recovery periods as short as practically possible, but I do recognise that they have issues they need to address, such as company profitability and solvency. They don’t want to push companies over the edge.”
The work and pensions select committee has asked Sir Philip Green, the former owner of BHS, to give evidence on 15 June.