The BHS' pension scheme was on the Pension Protection Fund's (PPF) radar as far back as in 2012, MPs were told today.
Alan Rubenstein, chief executive of the PPF, also explained to a committee hearing that the scheme had a 23-year recovery plan at that point, which is significantly longer than would usually be allowed.
Lesley Titcomb, chief executive of the Pensions Regulator, added later on in the session that they received a copy of the recovery plan in August 2013. The regulator opened a case into the plan to investigate why an "atypical" recover period was in place and, when the company was sold to Retail Acquisitions before that case was closed, an anti-avoidance case was opened.
The Pensions Regulator later went onto explain how it learned about the sale of BHS through the media.
Rubenstein added that the PPF and the Pensions Regulator discussed "intelligence" they had obtained about the future of the BHS pension when the concerns first arose, including information about Davenbush, one of the other Arcadia companies at the time, failing to get a guarantee to the retailer's pension fund re-certified.
According to Companies House, Davenbush itself was put into administration last Friday.
Rubenstein explained that, once the guarantee ceased to be in place, BHS "simply paid a higher levy", which was one of the ways that companies could reduce their PPF levy at the time. He said that a number of "major accountancy firms" would have been involved in advising firms that such an arrangement was possible.
Additionally, having to accept the BHS scheme into the PPF is unlikely to cause an immediate rise to the the levy, which is charged to all defined benefit scheme providers as a way of keeping the emergency pot afloat, as a certain degree of scheme failure is built into the charge, Rubenstein explained.
"Levy payers have been very clear to us that they want a levy approach that is stable and predictable," he added, explaining the methodology on which the levy was calculated to take into account the possibility of scheme failure.
When BHS went into administration last month, its pension scheme deficit was worth £571m, which would be the amount it would be likely brought out by an insurer for.
Rubenstein told the committee that he estimated the cost of the PPF bailing out the scheme would likely be £275m. He also pointed out that the 6,000-odd scheme members who had already reached pension age would receive 100 per cent of the benefit due to them, while the deferred members, of which there are roughly 13,500, would receive 90 per cent of their accrued benefit.
While Rubenstein pointed out that the 90 per cent recovery rule does come with a cap, the PPF had only identified 10 members of the BHS senior staff pension scheme who would be affected.
Today's evidence session marks the first in a series into the collapse of BHS, which will also take evidence from former owner Sir Philip Green. Green is expected to speak to the committees in mid-June.