Sir Steve Webb, director of policy at Royal London, said: “Carillion workers will understandably be devastated by the announcement of the liquidation of their firm.
“But they, and retired Carillion workers, can be assured that the pensions lifeboat, the PPF, will help to protect their pensions.
“Although there is a big shortfall across the Carillion pension schemes, the PPF is financially strong and will be able to pay out pensions in line with its normal rules. The deficit in the Carillion schemes will not sink the pensions lifeboat.”
Tom McPhail, head of policy at Hargreaves Lansdown, said retired members will continue to receive their pensions in full.
But he warned: “Those yet to reach retirement will see cuts of typically between 10 per cent and 20 per cent; there’ll be an initial reduction of 10 per cent when they reach retirement, plus they may lose some of their inflation proofing and higher earners may have some of their pension capped.
“The reported Carillion scheme deficit of £580m looks big, but thanks to prudent management in recent years the PPF currently has a surplus of over £6bn so they can absorb this hit if they have to.
“Scheme members can expect the administrators and the PPF to work together to ensure there is continuity of payments.”