A rescue plan is underway for thousands of workers and pensioners with the High Street store BHS.
The struggling company has a £200 million pension black hole.
The board has already agreed nearly 400 job losses and a lower rents for landlords in an effort to keep stores trading.
Now, the firm wants to ditch the pension scheme and hand the responsibility over to the Pension Protection Fund (PPF), a government agency which manages pensions companies can no longer afford to pay.
The PPF has confirmed talks are in progress with BHS and ‘other parties’ – believed to be a reference to high street mogul Sir Philip Green, who offloaded BHS last year.
Reduced pension payments
His company Arcadia Group is said to have offered BHS £40 million and to write off a similar amount in debts.
“Yes we are in talks, but no decisions have been made yet,” said a PPF spokesman.
BHS says 20,000 staff and pensioners have money in a closed defined benefit scheme.
If the PPF takes over the BHS pension, pensioners already receiving payments will continue to be paid as normal.
Those yet to draw benefits or who retired early will face have their pension payments cut by 10%.
“The pension trustees will keep members informed about the progress of the talks,” said the PPF spokesman.
BHS may go bust
“If the scheme comes under protection, members can expect at least the minimum levels of payments in compensation.”
BHS is currently under a company voluntary arrangement (CVA).
The company has asked landlords to help by slashing rents – although 77 of 164 stores will keep paying agreed rents, 47 have offered to pay between 50% and 75% and 40 want to slash rents by 75%.
Three quarters of landlords must agree the rental terms by March 23 for the CVA to proceed. If not, the firm stops trading.
However, retail consultant Damian Summer says landlords have seen the BHS troubles coming and have plans to replace the BHS stores with other tenants.
The PPF manages almost 6,000 pensions with a total deficit of £305 billion for 222,556 members, of whom 117,565 are paid compensation.
The average annual pension pay-out is £4,210 a year and since July 2007, £2.2 billion has been paid in compensation.
Philip green should be made to pay the deficit and he should be stripped of his knighthood he has never paid tax and now the government has to pick up his mess he’s a disgrace