Green has agreed to provide funding for a new independent pension scheme offering former staff the same starting pension as they were originally promised by BHS.
TPR added that the benefits that members will receive under the new scheme will be above Pension Protection Fund levels, and, on average, are closer to the original BHS schemes than to PPF compensation.
Members of the current BHS schemes will have the option to either transfer to the new scheme, opt for a lump sum payment if eligible or remain in their current scheme (and receive benefits from the PPF).
The lump sum payment option will be available to members with small pots of up to £18,000 in total value. Those who choose not to take a lump sum and opt to transfer to the new pension scheme will be entitled to the same benefit structure as all other members. The new scheme will also be eligible for the PPF.
TPR chief executive Lesley Titcomb said, “The agreement we have reached with Sir Philip Green represents a strong outcome for the members of the BHS pension schemes. It takes account of the interests of both pensioners and the PPF, and brings a welcome level of certainty to present and future pensioners.
“Throughout our discussions with Sir Philip and his team, we have always been clear that we were determined to achieve the right outcome for members of the schemes both in terms of the amount and the structure of the settlement.”
TPR added that all the settlement money is being held in segregated bank accounts with £343m placed in an escrow account to fund the new scheme and up to £20m being held in other accounts to cover expenses and the costs of implementing the member options and the new scheme.
The board of the new scheme will be made up of three professional independent trustees to ensure there is continuing robust independent governance.
Nicola Parish, executive director of Front Line Regulation, said, “We are confident that the agreement we have reached with Sir Philip represents a good outcome for current and future BHS pensioners, and, as such, our regulatory action will now cease.
“In reaching such a decision, we have to balance the outcome of any settlement against what we might achieve by pursuing anti-avoidance action, the risk of a prolonged period of legal challenge in the courts, and the delay and uncertainty that would bring to members.”
The settlement closes TPR’s enforcement action against Green and Taveta Investments Limited, Taveta Investments (No. 2) Limited while enforcement action against Dominic Chappell and Retail Acquisitions Limited will continue.
Iain Wright, chair of the Business, Energy and Industrial Strategy Select Committee said the development was “very welcome” and “goes some way towards addressing the weaknesses and greed in the BHS saga”.
However, Wright warned “up to” £363m isn’t satisfactory adding, “it will need to be the full amount”.
Wright previously urged Green to pay £700m to plug the BHS pension fund deficit, which stood at £571m at the time of the retailer’s collapse.
A report by Wright and Frank Field, chair of the Work and Pensions Committee, previously said leadership failures and personal greed led to the demise of BHS and the loss of 11,000 jobs, and concluded that Green was ultimately to blame.
In response to today's news, Field tweeted, "I very much welcome today's out-of-court settlement which is an important milestone in gaining the justice for BHS pensioners and former workers that we have been pushing for since beginning our inquiry into the downfall of BHS."