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Special Report

Impact investing


BHS Pension Scheme: The UK Pensions Regulator and the pariah

On 28 February came the news for which 19,000 former staff of the collapsed high-street chain BHS had been waiting: its former owner, Sir Philip Green, was to pay £363m (€414m) to prop up the company’s two pension schemes.

Sir Philip has been treated as a classic villain by much of the British press. His company Arcadia sold BHS in 2015 to Retail Acquisitions Limited for the nominal sum of £1. A year later, BHS was bankrupt.

The fate of the pension schemes soon became a very public case, with parliament’s Work and Pensions Select Committee launching an inquiry. Politicians queued up to publicly vilify Sir Philip, and they also turned up the heat on the Pensions Regulator (TPR) and the Pension Protection Fund (PPF).

The committee – chaired by Frank Field – said that Sir Philip “gave insufficient priority to the BHS pension scheme over an extended period” and “contributed substantially to the demise of BHS”. During the inquiry by the committee, Sir Philip had promised to help fix the BHS schemes, which were both in deficit.


BHS was also identified in the government’s recent consultation on corporate governance reform, with the committee calling for trustees of large pension funds to be subject to the UK’s corporate governance code.

The settlement on 28 February was negotiated by TPR and paves the way for the establishment of a new pension fund, which will aim to pay better benefits than those available in the PPF, which would usually take on the scheme of a bankrupt company. 

TPR chief executive Lesley Titcomb described the settlement as “a strong outcome” for BHS scheme members. “It takes account of the interests of both pensioners and the PPF, and brings a welcome level of certainty to present and future pensioners,” she added. “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.”

The new scheme will be established later this year, with Chris Martin of Independent Trustee Services chairing its board – as he did the existing BHS funds. The £363m includes £343m in funding for the new scheme and a separate £20m to cover expenses and implementation costs.

The arrangement breaks new ground for the UK pension system, and comes amid unprecedented scrutiny and talk of fundamental reform.

A week before the BHS announcement, the PPF set out a proposal for a new levy, to apply to schemes operating without a substantive sponsor and ensure they contribute to the defined benefit (DB) sector lifeboat fund. This is unlikely to have been a coincidence. The levy is designed to be temporary, in the expectation that government actions later this year will shape a more long-term policy – meaning the BHS scheme could be the only one to pay it.

The fallout is by no means over. At the time of going to press, TPR was still chasing Retail Acquisitions and director Dominic Chappell for a contribution to the new scheme – although Chappell has maintained he has no responsibility towards the pension arrangements.

In addition, there have been repeated calls for TPR to be given more powers to intervene during corporate actions, and the government has raised this as a core theme of its DB reform paper.

“We have considered the case for the regulator to have a clearance regime in certain specified circumstances, although we note the very significant difficulties that would need to be overcome before such an approach could be considered,” the paper said. “It would need to be very narrowly limited to avoid potentially significant disadvantages to business, and a high threshold would need to be set for the circumstances where seeking clearance would be required.”

UK business owners should be hoping for a strong regulator – at least one that can prevent them from becoming the media’s next pension pariah.

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