Defined Benefit  

Scammers circling Carillion pension scheme members

Scammers circling Carillion pension scheme members

Just one day since the announcement of the Carillion collapse, there are already signs that scammers may be circling the company’s defined benefit (DB) scheme members.

Pensions expert and founder of Pension Playpen, Henry Tapper, said adverts were already appearing on Google about final salary pension transfers that catered specifically for Carillion pension members.

He said: "This might seem dodgy to the trained eye, but it looks pretty plausible if you are a Carillion employee who has just lost your job and suspect you might lose your pension."

Industry body Pensions and Lifetime Savings Association (PLSA), has called on financial services regulators to take swift action to stop a repeat of the British Steel debacle, which saw unregulated introducers attempting to get members to transfer their retirement pots by offering them chicken dinners.

The defined benefit (DB) pension schemes of Carillion, one of the UK government's biggest contractors, will enter the Pension Protection Fund (PPF).

Carillion has 13 final salary schemes in the UK with more than 28,500 members, and a deficit of £587m at the end of July.

After unsuccessful talks with its lenders and the UK government, Carillion made an application yesterday (15 January) to the High Court for compulsory liquidation.

The accountancy firm PWC has been appointed as administrator.

Around 15,500 of the Carillion scheme members are deferred, which means they could transfer out their pension pots if a transfer request is put in time before the pension fund enters the PPF.

Seven pension funds have already entered a period of assessment at the pensions lifeboat, which have around 5,900 members, a spokesperson at the PPF said.

According to Joe Dabrowski, head of governance and investment at the PLSA, one in six pension holders in the UK have been contacted by a company – other than their provider – to discuss making changes or transferring their pension, which is why swift action is needed with Carillion.

He said: "Following the collapse of Carillion, we have already seen warning signs that scammers may be seeking to exploit DB scheme members' fears about their future. 

"We call upon regulators to act urgently to ensure that members are protected, and to take the strongest possible action against unscrupulous companies looking to take advantage of savers.

"Transfers should only be undertaken if they are in the best interest of the scheme member and with the right level of guidance."

Following the introduction of pension freedoms in 2015, the volume of defined benefit pension transfers has been soaring, as savers seek to take advantage of sky-high transfer values and to move their nest eggs into defined contribution schemes in order to access their cash.

Figures published by Mercer in April showed as much as £50bn has been pulled from final salary pension schemes in the past two years.