LONDON (Reuters) - Billionaire British retailer Philip Green has paid 363 million pounds to pension schemes of the now-collapsed department store chain BHS which he sold for one pound to a serial bankrupt with no retail experience.
The settlement, some eight months after Green promised lawmakers he would “sort” the issue, is a record for Britain’s pensions regulator, which has been going since 2005.
It was secured three months after it launched legal action against Green, who currently owns a string of UK fashion chains including Topshop.
The deal has the support of the trustees of the two BHS pension schemes which together have 19,000 members.
“I hope that this solution puts their minds at rest and closes this sorry chapter for them,” Green said on Tuesday, describing the payment as “a voluntary contribution”.
The demise of BHS was the biggest collapse in the British retail industry since Woolworths in 2008.
Green owned BHS for 15 years before he sold the loss-making 180-store chain to Dominic Chappell for one pound in 2015.
BHS’s pension deficit had ballooned to 571 million pounds by the time the retailer went into administration in April 2016 - a figure based on what an insurance company would pay if it were to buy out the funds. Some 11,000 jobs were lost in total.
While the last BHS stores closed in August, Green was lambasted by Britain’s tabloid media for cruising around the Mediterranean in a newly delivered super yacht.
“Once again I would like to apologise to the BHS pensioners for this last year of uncertainty, which was clearly never the intention when the business was sold,” he said.
A spokesman for Prime Minister Theresa May welcomed the deal as “a positive outcome”.
However, others criticised Green for taking so long to cut a deal.
“Green could have spared his staff many months of misery and uncertainty if he had stumped up the cash willingly, rather than only after many months of protracted negotiations,” said Steve Webb, director of policy at insurer Royal London and a former pensions minister.
The deal provides funding for a new independent pension scheme to give BHS pensioners the option of the same starting pension they were originally promised by BHS, and higher benefits than they would get from the lifeboat scheme, the Pension Protection Fund (PPF).
Alternatively scheme members may 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 pounds in total value.
“The agreement we have reached with Philip Green represents a strong outcome for the members of the BHS pension schemes,” said Lesley Titcomb, chief executive of the pensions regulator.
“It takes account of the interests of both pensioners and the PPF, and brings a welcome level of certainty to present and future pensioners.”
The settlement means the regulator’s anti-avoidance action against Green and his companies will cease. However, enforcement action against Chappell and his vehicle Retail Acquisitions continues.
The regulator said Green has placed 343 million pounds in an escrow account to fund the new scheme. A further 20 million pounds is being held in other accounts to cover expenses and the costs of implementing the member options and the new scheme.
Green will hope he has done enough to retain his knighthood, awarded in 2006 for services to retail. UK lawmakers backed stripping him of his title in a symbolic vote in October.
Additional reporting by Kylie McLellan, Editing by Paul Sandle and Susan Thomas/Jermey Gaunt