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By
Reuters
Published
May 10, 2016
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UK pensions 'lifeboat' flagged concern about BHS fund in 2012

By
Reuters
Published
May 10, 2016

Britain's Pension Protection Fund (PPF) first flagged concern about department store BHS's pension scheme in 2012, the fund's chief executive told a joint parliamentary committee on Monday.



The 164-store BHS was placed into administration, a form of creditor protection, by owner Retail Acquisitions last month, putting the 88-year-old retailer at risk of disappearing from British shopping streets and jeopardising 11,000 jobs.

BHS's pension scheme, which has 20,000 members and a deficit of 571 million pounds, was taken on by the PPF, a so-called lifeboat scheme paid for by a compulsory annual levy on all British pension schemes.

PPF CEO Alan Rubenstein told a joint session of parliament's Work and Pensions and Business, Innovation and Skills committees that in March 2012 he passed on intelligence about the BHS scheme to The Pensions Regulator.

At that time BHS was owned by retail tycoon Philip Green.

"The company (BHS) had been looking at using one of the Arcadia group companies to guarantee the pension fund and had in the end withdrawn that guarantee," Rubenstein said.

Arcadia is Green's company that owns several brands, including Topshop. Green owned BHS for 15 years then sold it in March last year to Retail Acquisitions, a group of investors, for a nominal sum of one pound.

Rubenstein said the cost to the PPF of closing the BHS pension scheme deficit would be about 270 million pounds based on its 2012 valuation. The 571 million pound deficit figure is based on what an insurance company would pay if it were to buy out the fund.

The Pensions Regulator is investigating whether BHS's previous owners sought to avoid their obligations and should be pursued for a contribution to make good the deficit.

Lesley Titcomb, CEO of the Pensions Regulator, told the committees it had not accepted a 23-year recovery plan for the BHS scheme it received in August 2013 and was in dialogue with the scheme when it learned of Retail Acquisition's purchase of BHS through the media. It then immediately launched a formal "anti-avoidance" inquiry.

The PPF's Rubenstein said a 23-year plan was over twice the normal length of recovery programmes.

Titcomb said the regulator was investigating "whether any of the parties connected with all of this, of which there are a large number, have walked away from their responsibilities."

She said she expected the investigation to have made significant progress by the end of 2016.

"A contribution notice can be enforced through the courts in the same way as any other debt can be enforced," Nicola Parish, the regulator's director of case management, told the committees.

"The PPF would be able to pursue that as a debt to the pension scheme."

The collapse of BHS is also being investigated by Britain's Insolvency Service.

 

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