As BHS becomes the latest significant High Street retailer to enter into administration, its defined benefit scheme is currently being assessed for entry to the Pensions Protection Fund (PPF). Many employers will want to know what (if any) safeguards were imposed by TPR at the time this failing business was sold for only £1 by Sir Philip Green only 18 months ago.

The BHS pension deficit is said to be around £571 million. There is some suggestion that in talks before the sale, Sir Philip offered around £80 million to the PPF to offload the pension liability. This was rejected. The questions now are whether the offer was reasonable at the time, why it was rejected and what actually happened afterwards. We know that TPR has now launched an investigation into whether Sir Philip, who owned BHS for 15 years, tried to avoid addressing the deficit while paying out more than £400 million in dividends. Was the focus on long term deficit avoidance and not simply linked to the corporate transaction? This will be a long and extensive investigation which will see TPR analysing every inch of the corporate transaction and other surrounding factors relating to past funding and the movement of assets. Given the size of the deficit, the sale to investors with little retail experience for a nominal £1, and the fact that it was well known in the retail sector that it was just a matter of time before BHS would fold, everything points to the high possibility that TPR will find ways to use its extensive moral hazard powers.

We understand that Sir Philip is said to have now offered £40 million but politicians are calling for him to contribute more. He is expected to appear before a select committee formed by the Department of Work and Pensions to investigate the administration, the pensions hole and the impact on the PPF.