Sir Philip's £300m plan to fix BHS pension deficit rejected as regulator pursues legal action

Sir Philip Green

Tonight the Pensions Regulator has revealed that it is pursuing enforcement action against Sir Philip Green and Dominic Chappell in an attempt to recover money on behalf of the 20,000 members of the BHS pension scheme.

The regulator's decision to send out "warning notices" is a clear sign that it believes both men have a legal responsibility to address the BHS pension deficit (last officially estimated at £571m on a buy out basis).

It also indicates that the regulator no longer believes it can reach a negotiated settlement with Sir Philip.

Sir Philip pledged to "sort" the problems with the BHS pension scheme when he appeared before MPs almost five months ago.

Since then discussions between Deloitte, Linklaters, the Pensions Regulator, the Pension Protection Fund and the BHS pension trustees have been ongoing.

Sir Philip believes he has honoured his promise. Tonight he issued the following statement:

I have read the statement from the Pensions Regulator this evening and noted its contents. I have provided the Regulator with what I believe to be a credible and substantial proposal, with evidence and bank confirmation of cash availability, which would prevent the scheme from entering the Pension Protection Fund. This is in order to achieve a better outcome for the BHS pensioners.

I have also spoken to the Chairman of the Trustees who is supportive of the proposal on the basis that it provides members with better benefits than they would receive from the PPF.

– Sir Philip Green

Now the sticking point here (no surprise) is money. Sir Philip is looking to agree a deal that will save the BHS pension from the Pension Protection Fund and exonerate him from any future liabilities for the scheme in future.

This would leave the BHS pension scheme without a sponsor so the pension authorities want him to stump enough cash to ensure it won't end up darkening the door of the PPF at some again.

No one will comment on the sum Sir Philip has offered but my understanding is it is well in excess of £300 million.

What is intriguing is that while the Pensions Regulator deems the offer inadequate, Sir Philip's statement suggests the trustees take a very different view.

It would appear that Chris Martin, whose job it is to represent the best interests of the 20,000 members of the BHS pension scheme, believes Sir Philip's proposal represents the makings of a deal he would be prepared to recommend.