Defined BenefitMar 21 2017

Green to get £15m refund on pension payment

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Green to get £15m refund on pension payment

Sir Philip Green is likely to get a £15m refund on the £363m he paid towards the new BHS pension fund, the Work and Pensions select committee has claimed.

The terms of the agreement Sir Philip reached with The Pensions Regulator mean some members are eligible for a "winding up lump sum".

The committee estimated that, if 90 per cent of those eligible for the lump sum claimed it, the savings to the scheme would see £15m returned to Sir Philip.

But even if half as many people take the lump sum, Sir Philip is still in line to receive a refund of £13m, the committee claimed.

Meanwhile, the commttee pointed out, many members were on track to receive less than the 88 per cent of their original benefits if they opt to go into the new scheme.

According to The Pensions Regulator, 54 per cent of members will receive between 85 and 90 per cent of benefits, while 8 per cent will receive between 80 and 85 per cent.

Because the indexation of benefit increase is less generous in the new scheme, TPR said those who live longest will be the most affected by the changes.

Meanwhile, 16 of the highest paid executives at the defunct firm would get the best deal out of it, because the new scheme will lift the annual benefits cap imposed by the Pension Protection Fund.

Frank Field MP, chairman of the committee, said he hoped Sir Philip would recycle any refunds back into the scheme, because many BHS pensioners were still facing cuts to their benefits.

He went on: “It is also clear that Sir Philip prioritised his loyal senior managers, who have had the PPF cap on high pension benefits completely removed.

"That measure was designed to encourage those in positions of influence to urge prudence and responsibility; I would be worried if TPR was content to see it jettisoned as a matter of course."

He said ordinary staff of working age had done "far less well" out of the deal.

“HMRC will not tell us what the tax implications of this settlement are but I fervently hope the public purse will not be missing out in the same way it does by the Greens’ complex offshore business arrangements," he said.

The agreement reached between Sir Philip and TPR in February was widely praised, with some speculating it was enough to see Sir Philip retain his knighthood - which MPs had already voted to remove (although this is not a decision for MPs).

However, the Work and Pensions select committee, which played a central role in drawing media attention to Sir Philip's role in the collapse of the pension scheme, quickly signalled it would closely scrutinise the terms of the deal.

james.fernyhough@ft.com