Philip Green plan to protect pensions of BHS executives

Britain's billionaire retailer Sir Philip Green is working on a plan to protect the pensions of former BHS executives, while encouraging rank-and-file staff to trade a steady retirement income for a less valuable one-off payment.

Documents published by a parliamentary inquiry revealed how Green proposed to avoid capping the benefits of ex-BHS workers, by rescuing their pension scheme himself instead of an official bailout. The measure would be most valuable to senior staff whose pensions far exceed the £32,000 cap under the Pension Protection Fund.

If the Pension Regulator approved the plan, Green would inject part of his fortune to close the deficit.

Experts estimate the cost at £100 million to £200 million. The main BHS staff scheme has 20,000 members and pays out about £2,800 for every pensioner in a typical year. Many would receive less valuable benefits if they opted into Greene’s mooted scheme.

However, the removal of the PPF cap would mean 230 former executives would receive more generous benefits from a scheme that currently pays out about £57,000 per retired member.

This week he vowed to revive the rescue plan, first mooted in 2014.

The regulator is investigating whether it can force Greene to contribute to the cost of bailing out people owed a pension.

The documents revealed on Friday also showed Green refused to contribute to the cost of a separate hedging strategy for the BHS pension fund in 2014.

– Copyright The Financial Times Limited 2016