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BHS pension gap 'wider than thought'
BHS pension gap 'wider than thought'
This is a duplicate of the Blog Entry made on: 8th March 2016 14:48
This is a duplicate of the Blog Entry made on: 8th March 2016 14:48
Department store chain BHS's pension scheme liabilities may be bigger than previously thought, court documents have revealed.
The precarious situation comes as the company tries to slash its rent bill with landlords to survive. BHS is trying to secure what is known as a Company Voluntary Arrangement, a form of compromise with its creditors. Its pension scheme deficit stands at £207m, but it is understood the current working deficit is much higher. The 147-page document, filed last week, is a sobering read. According to the documents, the scheme's buy-out valuation has now ballooned to £571m. In other words, this would be the cost if an insurance company were to take over the pension liabilities. This, however, is an unlikely move. BHS is already in discussions with the Pension Protection Fund, the government-supported rescue agency as well as the Pensions Regulator and the BHS pension trustees on addressing the deficit. The PPF pays compensation to members of pension schemes when a company goes under and does not have enough assets to pay out to savers.
Stark warning
BHS insists that it continues to meet its pension payment obligations. But in the submission, BHS's directors are clearly hoping that the two pension schemes will be transferred into the PPF and that the company would have no further liability to fund it. The chairman of the BHS Pension Trustees, Chris Martin, told BBC Radio 5 Live'sWake up to Money programme he did not think there was a future for the schemes outside the PPF, even if the business was successfully restructured. He also valued the combined pension scheme deficits at around £500m......Read more here
The precarious situation comes as the company tries to slash its rent bill with landlords to survive. BHS is trying to secure what is known as a Company Voluntary Arrangement, a form of compromise with its creditors. Its pension scheme deficit stands at £207m, but it is understood the current working deficit is much higher. The 147-page document, filed last week, is a sobering read. According to the documents, the scheme's buy-out valuation has now ballooned to £571m. In other words, this would be the cost if an insurance company were to take over the pension liabilities. This, however, is an unlikely move. BHS is already in discussions with the Pension Protection Fund, the government-supported rescue agency as well as the Pensions Regulator and the BHS pension trustees on addressing the deficit. The PPF pays compensation to members of pension schemes when a company goes under and does not have enough assets to pay out to savers.
Stark warning
BHS insists that it continues to meet its pension payment obligations. But in the submission, BHS's directors are clearly hoping that the two pension schemes will be transferred into the PPF and that the company would have no further liability to fund it. The chairman of the BHS Pension Trustees, Chris Martin, told BBC Radio 5 Live'sWake up to Money programme he did not think there was a future for the schemes outside the PPF, even if the business was successfully restructured. He also valued the combined pension scheme deficits at around £500m......Read more here