The Pension Protection Fund (PPF) is up against approximately £275m liability charges from the BHS’s £571m pension black hole, MPs have heard.
According to Sky News, Alan Rubenstein, Chief Exec of the PPF, told the House of Commons business and work and pensions committees that the fund could cover the sum without increasing the annual levy paid by solvent pension schemes to fund his organisation.
He made his comments as MPs questioned why the pension deficit was not flagged as a problem when concerns were raised in 2012 – a time when it stood at £200m.
The questioning from Rubenstein and the pension regulators marked the start of the parliamentary hearings, which are running separately to an inquiry by the Insolvency Service, into BHS’s collapse in to administration.
A recovery plan for the BHS pension scheme had supposedly been put forward that aimed to correct the deficit within 12 to 23 years but by March 2015 it still hadn’t been signed off – around the same time the Pensions Regulator admittedly found out about Sir Philip Green’s £1 BHS sale to Retail Acquisitions “through the newspapers”.
This causes concern around the nature of the sale to thrice-bankrupt Dominic Chappell, and the powers of the regulator.
Pensions Regulator Chief Exec Lesley Titcomb told MPs it launched an immediate anti-avoidance investigation, which would include a probe into “whether any of the parties connected to this had walked away from their responsibilities,” said Sky News.
One MP, Richard Fuller, told her: “You took 17 months to receive a plan. That plan had a 23-year recovery period, which sounds like it is twice the average, and your response was to ‘Open a recovery plan case’.
“The fund had a £200m deficit and growing, but you did not think it required ‘proactive response.
“And when you go after someone who has a fund which doesn’t have enough money in it, your first question is ‘How much can you afford?’ You are not much of a regulator, are you?”
“I don’t agree with that statement,” Titcomb said in response. “We have to, as a regulator, operate within the framework provided to us.”
Rubenstein told the committees they should think about setting clear limits for recovery plans – admitting the 23-year period was “exceptionally” long.
Although BHS collapsed into administration last month with a pension deficit valued at up to £571m, it has emerged that Green and other investors awarded themselves over £580m in dividends, rent ant interest payments.