The Pensions Regulator has confirmed that it is taking enforcement action against Sir Philip Green, after talks about the best way to tackle the BHS £571m pension deficit reached deadlock.
The retail tycoon has been sent a 300-page warning notice explaining why the regulator believes he must support the scheme. If he fails to respond within the specified timeframe, the regulator could force him to pay up.
The document sets out evidence supporting the need for both a ‘contribution notice’ which is the demand for a specified sum of money and a ‘financial support direction’ which would provide ongoing support for the pension scheme.
Further warnings have also been sent to Taveta (the holding group of companies run by Mr Green, and Dominic Chappell and his company Retail Acquistions, which hit the headlines when it purchased BHS in 2015 for just £1.
“We are yet to receive a sufficiently credible offer”
Lesley Titcomb, chief executive of the Pensions Regulator says: “Our decision to launch enforcement action is an important milestone in our work to attain redress for the thousands of members of BHS schemes who have been placed in this position through no fault of their own.”
“Issuing warning notices at this time reflects the outcome of our investigations and that we are yet to receive a sufficiently credible and comprehensive offer in respect of the BHS schemes. We continue to pursue the best deal for members of the BHS pension schemes. If parties wish to approach us with settlement offers, that course remains open to them.”
Ros Altmann: Sir Philip Green “should now pay up”
Former pensions minister, Ros Altmann says Mr Green could have avoided many of these problems had he followed the correct procedures when he sold BHS.
She says: “We have an established process for companies that want to sell businesses with large pension deficits. You go to the regulator, you will be asked to provide information and evidence to show the funding of the pension scheme and how you have supported it in the past, and then the regulator will assess the situation and tell you how much you need to pay in order to meet your responsibilities.”
Although Mr Green did originally apply for clearance he did not follow the process through. Ms Altmann adds: “It is not clear why. Did he not want to provide all the information asked of him? If so, he has now had to provide it anyway. Did he decide to just take a gamble and hope he could avoid further payments? If that was the case, he lost and should now pay up. In any case, it would be entirely wrong to try to avoid proper responsibility for the pension promises made to BHS workers.”
In October MPs unanimously voted to strip Mr Green of his knighthood. The vote itself does not carry any legal weight but it is thought it will increase pressure on the Honours Forfeiture Committee to take action.