Regulator ‘not fit for current commercial world’: BHS adviser

Regulator ‘not fit for current commercial world’: BHS adviser

An adviser to BHS has said The Pensions Regulator and the Pension Protection Fund are “not fit for the current commercial world”, after they refused a plan that could have prevented the BHS pension scheme from going into the PPF.

Giving evidence to MPs on the Work and Pensions select committee, Michael Hitchcock, who was employed as an adviser to BHS in August 2015, said the company’s rescue plan, Project Vera, involved imposing a 7 per cent “haircut” to pension benefits.

That figure contrasted with the 10 per cent reduction in benefits imposed on schemes in the PPF.

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“The pension fund absoulutely did not have to go into the PPF. And I have to suggest that the process of the TPR and PPF is not fit for the current commercial word. It is cumbersome, I do not think it is acting in the interest of the pensioners,” Mr Hitchock said.

He described the meeting at which Project Vera was proposed as a “jamboree”, where there were far too many parties present to reach a decision.

“It was like a Mexican stand-off. Everyone was dancing around with their handbags,” he said, claiming the fault lay with the TPR and the PPF.

Darren Topp, chief executive of BHS when the company went into administration, agreed that Project Vera could have delivered a superior outcome to scheme members.

“It’s fair to say we were very much conscious of the pension deficit. All of us wanted to find a solution to the pension deficit,” he said.

“We thought [Project Vera] was, frankly, an attractive alternative to the fund going into the PPF.”

The issue of defined benefit pension scheme deficits and their negative effects on their sponsoring companies has been in the spotlight in recent weeks. At the end of May the government proposed imposing a haircut on the British Steel Pension Scheme in order to facilitate the sale of Tata Steel.

The next day MP Frank Field, who chairs the Work and Pensions select committee, announced that he would be leading an inquiry into the issue as a whole, in which he would be looking for “radical solutions” to what he called “intergenerational trade-offs of income and wealth”.

Responding to Mr Hitchcock’s claims, a spokesperson for The Pensions Regulator said:

“While we were involved in discussions with Retail Acquisitions Limited regarding the pension scheme after the sale of BHS, at no time was a formal proposal put to us for a restructuring of the scheme. It is therefore not correct to say we did not approve any scheme restructure plans.

“We are fully aware of the demands on parties when a commercial or business transaction is being considered. Where parties approach TPR to consider a transaction or the restructuring of a pension scheme, we always endeavour to respond and work with parties as quickly as possible if the correct information is provided. Clearly we cannot agree to anything unless we are shown credible figures.”