Former BHS owner Sir Philip Green has settled the collapsed retailer’s pension scheme by agreeing to pay up to £363m.

Green has made the voluntary contribution to fill the black hole in the fund following lengthy discussions with the Pensions Regulator and the Pension Protection Fund (PPF).

Green said in a statement that his payment, which includes a £343m cash payment plus up to £20m towards the costs of implementing the member options and the new scheme, represented a “significantly better outcome” than the schemes entering the PPF.

The Arcadia tycoon said in a statement: “The settlement follows lengthy, complex discussions with the Pensions Regulator and the PPF, both of which are satisfied with the solution that has been offered.

“To achieve a significantly better outcome than entering the PPF, the contribution required to achieve this long-term solution was arrived at by the actuaries for both The Regulator and the Trustees.”

Green said he hoped the settlement would “close the sorry chapter” for BHS pensioners.

He added: “Once again I would like to apologise to the BHS pensioners for this last year of uncertainty, which was clearly never the intention when the business was sold in March 2015.

“I am also happy to confirm that any of the pensioners that have faced cuts over the last year will now be brought back to their original BHS starting level pension and will all be made whole.

“I hope that this solution puts their minds at rest and closes this sorry chapter for them.”

The BHS Pension Trustees said the settlement gave pensioners the option to receive pensions at the full starting level that they were promised by the BHS schemes.

Any current pensioners who have received lower benefits since March 2016 as a result of the PPF level of compensation will have the opportunity to receive lump sums to make those underpaid benefits whole.

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

A third option will allow members to remain in the original BHS Pension Schemes, which are likely to transfer to the PPF. Payments would then be subject to the PPF’s levels of compensation. 

Chris Martin, chairman of the BHS Pension trustees, 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.”

Martin added: “The injection of cash from Sir Philip 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.”