Sir Philip Green in Line For £15 Million Refund From BHS Pension Payment

Sixteen of the best-off former BHS executives set to benefit most from Sir Philip’s out-of-court settlement

A first look at the detail of Sir Philip Green’s out-of-court settlement with TPR on the BHS pension fund deficit by the Work and Pensions Committee reveals a lot of variation around the headline “88% of promised benefits” figure, with a small number of the highest paid former managers set to do best out of the deal.

Letter from The Pension Regulator with details of the out-of-court settlement reached with Sir Philip Green

Initial analysis shows that if there is 90% take-up of the “winding-up lump sum” or WULS option offered as part of the settlement  Sir Philip is in line to get a refund of £15 million from the £363 million settlement. 90% was the estimate of take-up of the same option in the Project Thor proposed pension restructuring made by Sir Philip’s own advisers, Deloitte.

Sir Philip’s built-in refund begins with the very first lump sum taken, so even if double the number of eligible people expected choose not take the lump sum option, he will still get over £13 million back.

The headline figure that scheme members will receive 88% of their promised benefits hides a great deal of variation. Owing to less generous indexation in the new scheme, some pensioners will receive less than 80% of what they would have received under BHS scheme rules.

Image: Sir Philip Green

Those that do best are the 16 people with the best pensions as they would have been subject to the PPF cap, which has been removed as part of the settlement and will not be applied in the new scheme. The cap exists to incentivise the highest paid executives in a firm, with the highest pension benefits, to take care of the pension fund and prevent it falling into the PPF.

Had the scheme gone into the PPF then members would have received, on average, 69% of promised benefits.

Frank Field MP, Chair of the Committee, said: “I hope Sir Philip will recycle any refund back into the scheme as BHS pensioners will still be facing cuts in the benefits for which they paid.

“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. Those who do far less well out of the settlement are the ordinary staff of working age, many of whom lost will have lost their jobs as well.

“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.”

The Committee is publishing the correspondence with HMRC on the tax implications of the settlement, and follow up questions to The Pension Regulator:

Letter-from-Frank-Field-to-Jon-Thompson-re-tax-implications-of-BHS-settlement-8-3-2017

http://www.parliament.uk/documents/commons-committees/work-and-pensions/Correspondence/Letter-from-Frank-Field-to-Jon-Thompson-re-tax-implications-of-BHS-settlement-8-3-2017.pdf

Letter-from-Jon-Thompson-to-Frank-Field-re-tax-implications-of-BHS-settlement-16-3-2017

http://www.parliament.uk/documents/commons-committees/work-and-pensions/Correspondence/Letter-from-Jon-Thompson-to-Frank-Field-re-tax-implications-of-BHS-settlement-16-3-2017.pdf

Letter-from-Frank-Field-to-Lesley-Titcomb-re-out-of-court-BHS-pension-settlement-20-03-2017

http://www.parliament.uk/documents/commons-committees/work-and-pensions/Correspondence/Letter-from-Frank-Field-to-Lesley-Titcomb-re-out-of-court-BHS-pension-settlement-20-03-2017.pdf

Full inquiry details: BHS inquiry  and  Pension Protection Fund and Pensions Regulator