After Green pays up, more firms face pressure to shore up pensions

PRESSURE is mounting for firms with huge pension black holes to act after Sir Philip Green finally stumped up £363million to help former BHS staff.

The disgraced retail tycoon has handed over the cash to support 19,000 pension scheme members left in limbo by the collapse of the department store chain.

It failed a year after he sold it to thrice bankrupt ex-racing driver Dominic Chappell for £1, with a £571million pension deficit built up during Sir Philip’s time in charge.

The deal with the Pensions Regulator brings to an end months of wrangling in which he faced the loss of his knighthood and became a pariah in City circles.

Yesterday, campaigners said the deal sent a message to other businesses to fulfil their obligations or face being brought to book.

They singled out the British Steel pension fund, which is expected to have a deficit of £1billion to £2billion at its next valuation, Hoover’s scheme with a £500million shortfall and the collapsed turkey firm Bernard Matthews, which went into administration with a £75million black hole.

Former pensions minister Baroness Ros Altmann said: ‘Hopefully it will show other employers that they can’t expect to get away with underfunding a pension scheme.’

Defined benefit pension schemes have come under growing pressure from record low interest rates. As a result, most new staff are now on riskier, less valuable defined contribution plans.

Meanwhile, the surviving defined benefit schemes have plunged into the red, leaving employers scrambling to cover the shortfall out of their own profits.

At the last count, the 5,794 schemes monitored by the Pension Protection Fund had a combined deficit of £196.5billion.