Joanne Horton, a professor of accounting at Warwick Business School, said the story of Carillion might have played out differently had the company directors been invested in the scheme themselves.
She said while the workers’ final salary plans ended up in assessment at the Pension Protection Fund (PPF), the directors did not lose out, as they were members of another executive pension scheme, which appeared to be well-funded prior to the contractor going into liquidation.
Ms Horton said: "If Carillion chief executive Richard Howson and his executives had been members of the company’s main pension plan the outcome might have been different.
"If they had paid more into the main pension plan alongside their employees, instead of having their own executive pension scheme, they would have stood to lose the most when the company collapsed."
Amber Rudd, secretary for Work and Pensions, announced yesterday (February 11) that "wilful or reckless behaviour" relating to a pension scheme will become a criminal offence, to avoid future "Philip Green-style pension scandals".
The new sanctions include a prison sentence of up to seven years for company bosses, and unlimited fines to be charged by the courts.
Ms Horton added: "Government plans to protect DB pension schemes are a welcome development, but the focus is still on punishing ‘reckless’ trustees, rather than encouraging CEOs to fund pension schemes properly.
"It is incredibly difficult to define what constitutes ‘reckless’. The decisions the trustees took may have been completely rational at the time, they just turned out to be the wrong ones."
She also said the problem was trustees could recommend the company boss should contribute more to the pension scheme but the CEO can always say no.
She said: "As CEOs have the final say, it seems far more logical to incentivise them to fund the main pension scheme properly by requiring them to be members, rather than threatening the trustees with a punishment that could be near impossible to enforce."
Ms Horton, alongside Paraskevi Vicky Kiosse from University of Exeter Business School, and Evisa Mitrou from Queen Mary University of London, published a study which examined all 322 publicly listed UK firms that offered a DB pension scheme between 1999 and 2013.
They found 74 per cent of these schemes were in deficit to a total of £560bn.
As a result, 74 companies fully closed their final salary plan during this period. A further 156 firms partially closed their pension plans, denying access to new members of staff.
The researchers found chief executives were 77 per cent less likely to close the firm’s main DB scheme if they were a member and a trustee of the plan, even if the scheme was in deficit.
However, if the CEO was a member of a separate executive pension scheme and the main pension plan was underfunded, it was 62 per cent more likely to close.
Ricky Chan, director and chartered financial planner at IFS Wealth & Pensions, said that this is an interesting idea.
He added: "I’m sure it helps to some extent, but I think its success depends on how much the DB pension is actually worth to the CEO and how important it is in relation to his/her total remuneration.
"For example, CEOs are typically very well paid and with many years of experience. If the CEO only has a limited number of years in the DB scheme (eg they were recruited externally rather than internal promotion), or has sufficient wealth elsewhere, then it’s immaterial to them.
"Or if the CEO has large share options/bonuses as part of their remuneration, then the pension scheme is again not so important than the financial health of the business.
"The 'stick' of prison sentence is probably a better than the 'carrot' proposed in my opinion."
maria.espadinha@ft.com
