BHS was unable to put money into its ballooning pension deficit as it was “being stripped to the bone” according to written evidence submitted to a joint parliamentary enquiry examining the collapse of the retailer.
The minutes of meetings between the BHS pension trustees and Paul Coackley, the chief operating officer of Arcadia, show that he repeatedly refused to raise the contribution into the pension schemes beyond £6.5m a year, which was the amount budgeted.
He said it could not “be countenanced as this would jeopardise opportunities to return the business to profitability and, in all likelihood, would result in further redundancies and job cuts”.
The minutes state: “The trustees were reminded that the company is being stripped to the bone and operational needs must take precedence”.
Last week, Sir Philip Green, the retail tycoon who owned BHS for 15 years, told MPs that the pension trustees had not alerted Arcadia to the mounting pension issue.
Between 2006 and 2008, the schemes suffered “marked deteriorations” which would “clearly lead to a sharp increase in the company's future pension costs”.
The BHS pension scheme is nursing a £571m pension deficit and is in talks to enter the pension protection fund.