Thousands of British Home Stores pension scheme members will today receive a letter outlining their options following the company's collapse last year.
BHS entered administration in April 2016. Today (15 June) 18,000 former employees will receive a letter from the company's pension trustees setting out what this will mean for their retirement savings.
The options for the pension scheme members follow the settlement reached in February between The Pensions Regulator, former BHS owner Sir Philip Green and the pension scheme trustees - with the involvement of the Pensions Protection Fund.
Chris Martin, chair of the BHS trustees said: “Protecting member benefits and providing certainty for members has always been our priority.
"I’m pleased we are now communicating with members about their options so they can make an informed decision about what is best for them.
"Members are now being given the option to decide whether they wish to transfer to a new pension scheme, take a one-off lump sum (if eligible) or remain in their current BHS scheme and continue to receive benefits in line with PPF compensation.
"These options create flexibility and choice for the members and we believe that in the vast majority of cases offer a better outcome than would otherwise be available”.
Mr Martin added, “There is a free guidance helpline available to support members in choosing the right option for them. If any member of the BHS schemes who reads this has not received an option letter in the next few days they should contact the scheme administrators Barnett Waddingham on 0333 555 0805.”
The options follow a deal Sir Philip Green made with the Pensions Regulator to pay £363m into a new pension scheme for former employees of the failed business.
The new scheme will pay members the same starting pension that they were originally promised by BHS, with higher ongoing benefits than they would have received from the Pension Protection Fund.
Members will be given the option of moving into the new scheme or remaining in the PPF and accepting the mandatory 10 per cent cut to benefits imposed by the lifeboat fund.
Those with small pots of up to £18,000 will also have the option of taking a cash lump sum.
In a statement in February, TPR chief executive Lesley Titcomb said: "The agreement we have reached with Sir Philip Green represents a strong outcome for the members of the BHS pension schemes. It takes account of the interests of both pensioners and the PPF, and brings a welcome level of certainty to present and future pensioners.
"Throughout our discussions with Sir Philip and his team, we have always been clear that we were determined to achieve the right outcome for members of the schemes both in terms of the amount and the structure of the settlement."
The regulator stated that the £363m paid by Sir Philip was being held in segregated bank accounts, including £343m in an escrow account to fund the new scheme, and up to £20m in other accounts to "cover expenses and the costs of implementing the member options and the new scheme".
As well as avoiding the 10 per cent benefit cut enforced on new retirees by the PPF, members of the new scheme will also receive death benefits at a higher rate than the PPF offers; members will no longer be subject to the PPF compensation cap; and pensions earned before April 1997 will increase in payment.
The scheme will also be eligible to fall into the PPF.
