Clouds gather over BHS pension scheme as it emerges applicants could be waiting two years to know if it will enter the PPF
Morning Wire understands that it could take up to two years for the scheme to enter the Pension Protection Fund (PPF), meaning BHS employers entitled to a pension face a long wait to find out what they will receive in retirement.
The BHS pension scheme must go through an assessment period by the PPF, during which the PPF ensures all the data held for the scheme is correct, and to make sure that all members receive the right payouts.
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During this period, payouts are protected and the pensions regulator will seek sources of funding to fulfil the scheme's commitments. Should the scheme eventually enter the fund, any members who have not yet retired will see their future benefits reduced by 10 per cent.
The PPF is covered by a levy on firms which have defined benefit pension schemes.
Adam Marshall, acting director general of the British Cambers of Commerce, said it was unfair to make small- and medium-sized firms that pay into the PFF to cover the pension deficits for BHS.
He said: "This is particularly true when there are legitimate questions about corporate decision-making and payouts to shareholders.
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"Small- and medium-sized firms make a substantial contribution to the Pensions Protection Fund through an annual levy. It would be unfair for their payments to have to rise to cover the deficits in gigantic schemes like that of BHS, and would be a potential brake on those levy payers' future investment and growth.”
Redundancy payments due to BHS staff will ultimately come out of the public purse, via the National Insurance Fund, and could cost taxpayers £12m, according to Nick Hood, a business risk adviser for Opus Restructuring.
He added: "But I think that number might be a bit low. At Comet, the cost was nearer £25m, and they had fewer staff."
The payouts are likely to be received by staff 5 or 6 weeks after they are laid off, but Hood said the time period would depend on the number of applications being handled by the government at any one time.
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However, City A.M understands that the administrators may be able to save some of the 8,000 jobs at risk at BHS, if a buyer comes forward who is interested in both the shops and the staff.
Some BHS stores will stay operational longer than others. For example, the flagship store in Oxford Street is expected to stay open for a period until all the stock is sold.
The administrators are now looking for buyers for the brand and all 163 BHS stores, which could be sold in groups, and while the administrators continue with this process, BHS stock is being sold.
Primark and Next are circling some BHS stories, Retail Week has reported.