Arcadia boss Sir Philip Green has made a voluntary contribution of £363m to settle the BHS pension scheme deficit.
He said the cash settlement provides the trustees of the BHS pension schemes with a “significantly better” outcome than if the schemes had entered the Pension Protection Fund (PPF), which was his goal from the outset.
It follows complex discussions with the Pensions Regulator and the PPF, both of which are said to be satisfied with the solution that has been offered.
All relevant notices, including legal matters and claims from the regulator, have been withdrawn to bring the matter to a conclusion.
Green 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.”
PPF chief executive Alan Rubenstein confirmed that the settlement relieves its levy payers of the cost of meeting the initially reported shortfall.
“The Pensions Regulator will be monitoring the new scheme and members will be protected by the PPF,” he added.
Frank Field, chair of the work and pensions select committee, which held an inquiry last summer into the collapse of BHS, welcomed the out-of-court settlement.
“[It] is an important milestone in gaining the justice for BHS pensioners and former workers that we have been pushing for since beginning our inquiry into the downfall of BHS,” he said.