Beleaguered former BHS workers could have to wait years until they get answers about what will happen to their pensions, say experts.
The Pensions Regulator has become so fed up with waiting for former BHS owner Sir Philip Green to provide reassurance about pensions, that formal legal proceedings have now been begun.
In a dramatic move, the regulator has sent out enforcement notices to Sir Philip after failing to agree a deal to resolve the £571 million pensions deficit.
Pensions expert John Ralfe now says former employees could be waiting years for any sort of resolution to the standoff.
The regulator does have the power to insist that Sir Philip pays the deficit. However, the retail entrepreneur could decide to launch an appeal and take that all the way to judges at the supreme court.
Mr Ralfe described the situation as “very rare,” saying that there weren’t any precedents to compare it to.
He added: “It will take years. It’s going to be a long war of attrition.”
Analysts believe that this drastic action by the pensions regulator could now increase the likelihood that Sir Philip will be stripped of his knighthood.
MPs have already voted symbolically to take the honour away from him.
It is believed that Sir Philip had made an offer, which was turned down by the regulator because the amount he was putting forward was too low. The proposed deal was also seen as too risky to go ahead with.
So far, it is unclear exactly what Sir Philip was offering to pay, but the sum is believed to be around the £250 million mark, while the regulator is said to want at least £50 million more than that.
How the deal is to be structured is also key. Sir Philip is believed to have said he would buy out pensioners with small savings pots before setting up a new fund.
His proposal did not include the security of a sponsoring company, a move which would have been against Pension Protection Fund guidelines.
Mr Ralfe said he believed the industry regulator was correct in beginning enforcement action.
He said that Sir Philip was making a nonsense of the situation by trying to “make things up on the hoof”.
Former pensions minister Ros Altmann said Sir Philip needed to realise that: “You don’t tell regulators what you believe is the right amount – they tell you.”