PensionsJul 26 2016

Pensions Regulator has power to make Green pay

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Pensions Regulator has power to make Green pay

The Pensions Regulator has confirmed it potentially has the power to force former BHS owner Sir Philip Green to make up for a several hundred million pound shortfall in the company’s pension scheme.

However, the regulator pointed out it would be several months before its own investigation was completed and it was in a position to make a such a decision.

The clarification followed the publication of a damning select committee report into the collapse of BHS, in which MPs placed the blame for the collapse of BHS, and the resulting pension shortfall, squarely on Sir Philip’s shoulders.

They also followed former pensions minister Baroness Ros Altmann’s statement that The Pensions Regulator had the power to force him to fork out money if it believed the scheme was not adequately funded under his watch.

A spokesperson for the regulator told FTAdviser the Pensions Act did indeed allow it to use anti-avoidance powers against companies or individuals with connections to a pension scheme, even after the sale of that company.

However, they stressed the regulator had reached no decision on whether it would exercise these powers in the case of BHS, adding it was unlikely to do so until the end of its own separate investigation.

“Our focus is on achieving the best possible outcome for members of the BHS pension scheme and PPF levy payers. Our discussions with Sir Philip Green and his advisers are ongoing. We will not be making any further comment at this stage,” the spokesperson said.

On Monday (25 July), The Pensions Regulator’s chief executive Lesley Titcomb said she expected the investigation “to have made significant progress by the end of this year”.

Following the release of the select committee report, Baroness Altmann lost no time in pointing out the regulator had the power to hold Sir Philip to account.

“The regulator does not have the power to prevent a sale, but it does have the power to force a seller to pay more money into the scheme after the sale, if the employer has not supported the scheme,” she said.

“If [the regulator] believes that under the previous owner the scheme was not adequately funded, it can require him to pay in extra sums. In theory, it can require hundreds of millions of pounds to be paid,” she said.

The select committee report took a different angle, stressing Sir Philip’s “moral duty” to contribute to the scheme, rather than his legal duty.

Libel lawyers acting for Sir Philip Green have demanded an apology after MP Frank Field likened the retail tycoon’s conduct to that of Robert Maxwell, the former press baron who plundered the Mirror Group pension scheme.

In a letter seen by FTAdviser’s parent newspaper the Financial Times, law firm Schillings said that the co-author of the select committee’s report into the collapse of BHS had wrongly alleged that Sir Philip had stolen money from the pension funds of companies he owned.

The comments were made on the BBC’s Today programme, which the law firm complained were highly defamatory, completely false and likely to cause Sir Philip serious harm.

The letter was sent hours after the MP used a radio interview to accuse Sir Philip of having “plundered” BHS, the high street retailer he once owned.

He had said that whereas Maxwell had run out of money by the time he died, Sir Philip could afford to plug the pensions deficit left behind by the collapse of BHS. He said that the retail tycoon’s failure to do so was “much worse” than Maxwell’s behaviour.

But Schillings wrote: “Our client has never stolen any money from BHS, Arcadia or the pension funds and you know that.”

The law firm added that there was “nothing” in Mr Field’s parliamentary committee’s report to support his allegation.

It gave Mr Field 24 hours to apologise and said the “remedies” available to their client would depend on the “form and manner” of Mr Field’s response.

james.fernyhough@ft.com