BHS chair of the trustees Chris Martin has expressed his delight at the £363m deal reached with Sir Philip Green for the retailer’s pension scheme.

The agreement was confirmed 28 February by The Pensions Regulator and it means members of the schemes will receive more than the benefits provided by the Pension Protection Fund. They will instead be offered pensions at the full starting level that they were promised by the BHS schemes.

Current pensioners who have received lower pension benefits since March 2016 due to the PPF level of compensation being paid will have the opportunity to receive lump sums to make those underpaid benefits whole.

From the agreed sum, £343m will be used to enable the trustees to make offers to improve benefits to all members of the schemes. The additional £20m will be used towards the costs of implementing the member options and a new scheme.

Martin said: “I am delighted to confirm we have reached an agreement with Sir Philip on additional funds. I am equally delighted we are now in a position to confirm that members will be offered benefit improvements, enhanced flexibility, and just as importantly, long term sustainability for their benefits.”

“The PPF has done an excellent job in providing a safety net for members, giving them certainty of pension income since the insolvency of BHS. We have however now reached a final deal which provides long-term certainty combined with the option of improved benefits for members.”

In addition, Martin said the injection of cash of puts the new scheme on a “stable footing”.

“The trustees have carefully considered all aspects of the deal and we are confident that this is a robust scheme that delivers improved and sustainable benefits. We are now focused on communicating with members to initially outline the options that will be made available so that they are aware of the next steps and are able to make informed decisions at the appropriate time. I want to thank Sir Philip, The Pensions Regulator and PPF for their efforts over the last year and am pleased that this agreement delivers for all members.”

Key features of the new scheme option (Option 1) are: Benefits will not be subject to the PPF adjustment to 90% of original scheme levels; death benefits will be paid at higher than PPF compensation; pensions earned before April 1997 will increase in payment as the PPF does not pay increases on these pensions; members will not now be subject to the PPF compensation cap; and, current pensioners will also receive a lump sum to make up for any underpaid pension benefits since 3 March 2016 due to PPF compensation levels having been applied.

As an alternative option, members with a small annual pension may exchange this for a one-off winding up lump sum (Option 2). This sum will be provided on the basis of the new scheme’s level of benefits.

Members also have the option of remaining in the original BHS Pension Schemes which are likely to transfer to the PPF where entitlements will be subject to PPF levels of compensation (Option 3).

The BHS Pension Trustees have confirmed this deal with the Pensions Regulator, the PPF and Sir Philip Green today, both the scheme assets and the additional sum of money are now under the trustees’ control.

All members will receive a written communication from the trustees in the coming days, and the Trustees expect to make detailed offers to pension members in the next three to four months. While this process takes place there is no change to entitlements as members will continue to receive benefits at PPF levels.

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