Defined Benefit  

MP demands answers on Carillion pension schemes

MP demands answers on Carillion pension schemes

The shadow secretary of state for work and pensions has demanded answers about the large deficit in the Carillion defined benefit (DB) schemes.

Labour MP Debbie Abrahams, has written to Esther McVey, the secretary of state for work and pensions, and to Lesley Titcomb, the chief executive of The Pensions Regulator, asking questions about the current state of the schemes, which will enter the Pension Protection Fund (PPF) after the collapse of the construction company, which was on of the British government's biggest contractors.

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.

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Ms Abrahams said Carillion schemes deficit had nearly doubled from £317m in 2015 to the current level.

She said: "I believe that Carillion have failed in their duty to ensure that their pension provision was adequately managed and resourced. Despite profit warnings and unsustainable debt levels they allowed their deficit to grow."

Carillion, which employs about 43,000 people, has struggled for several months, issuing a profit warning last year that sank its share price – which has fallen from more than £2 a year ago to about 14.2p on Monday.

In her letter to TPR, Ms Abrahams asked the regulator to disclose when it was informed by the scheme trustees about the pension funds’ difficulties, and what action the watchdog took following that notice.

She also questioned Ms McVey on what the implications were for the PPF of taking on board the Carillion schemes – which could have a cost as high as £900m, the largest on record.

Ms Abrahams also asked what would happened to members of Carillion defined contribution schemes which aren’t covered by the pensions lifeboat.

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

The accountancy firm PWC has been appointed as administrator.

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

In the meantime guidance body The Pensions Advisory Service (Tpas) has set up a dedicated helpline for members of the Carillion pension schemes.

On Monday, Liberal Democrat MP Stephen Lloyd submitted a motion in Parliament calling for an inquiry into collapsed Carillion.

FTAdviser reported yesterday (17 January) that there are already signs that scammers may be circling the company’s DB scheme members.