Carillion bosses face consequences of pensions deficit
The Pensions Regulator (TRP) has confirmed that it is considering issuing a ‘contribution notice’ against former Carillion directors, which would compel them to contribute personally, to plug the huge pension deficit that has emerged following the collapse of the business in January.
The Chair of the Parliamentary Pensions Committee, Frank Field MP said, in a letter to TRP: ” We urge TRP to take this opportunity to demonstrate the new direction and vigour it keeps professing. Clear, exemplary action, not words, is necessary now to restore any confidence in its ability to do its job and protect the pensions of ordinary people.”
Carillion was liquidated with debts in excess of £800m, and the Pension Protection Fund (PPF) will now be forced to pick up those costs. The PPF will be entitled to a slice of any monies generated by the sale of Carillion’s assets, but estimates suggest that might garner as little as £44m, of which the PPF might get only £12.6m.
Field added: “The Carillion directors continued to line their pockets as the pension entitlements of their workforce evaporated, with the PPF due to shoulder the staggering pension deficit they left behind. It appears though that TRP could set its sights on more than those ill-gotten gains, and go after the directors it finds responsible for everything they have got.
In their letter to the TRP, the Pensions Committee continued: ” Ernst & Young, commissioned by Carillion to model recoveries in the eventuality of a liquidation back in December 2017, suggested the PPF could get as little as £12.6m. By contrast, our analysis of Carillion’s annual accounts suggests that over the past decade, Carillion’s six main directors pocketed nearly £17m in total remuneration. Whilst such amounts will not go far in offsetting the largest bill the PPF have ever picked up, estimated at £800m, it is surely the case that these directors have benefited disproportionately at the expense of the pension schemes they should have been funding.”
