MPs accuse Carillion of trying to 'wriggle out' of pension contributions
2 min read
The bosses of collapsed outsourcing giant Carillion "wriggled out" of their commitments to the company's pension scheme, an influential committee of MPs has claimed.
The firm went bust two weeks ago after racking up a mountain of debt and a pensions deficit approaching £1bn.
Former employees now face losing a significant amount of their retirement income if they join the industry-funded Pension Protection Scheme.
The Work and Pensions Committee has today published a letter from Robin Ellison, the chairman of Carillion's defined benefit pension scheme, in which he says the company experienced "constraints in cash flow" that contributed to the pension deficit.
Last year contributions to the pension scheme were deferred as the company struggled to stay afloat, with Mr Ellison saying the deficit was now around £990m.
He will appear before the committee in person later this week to give details about how the company managed its various pension schemes.
Committee chair Frank Field tore into the company's directors, saying: "It's clear that Carillion has been trying to wriggle out of its obligations to its pensioners for the last 10 years...
"The purported cash flow problems did of course not prevent them shelling out dividends and handsome pay packets for those at the top," said Mr Field.
"This culminated in negotiating deficit contributions away entirely last autumn to enable more borrowing.
"Remarkably, this was endorsed by the trustees and the Pensions Regulator."
A spokesperson for the Pensions Regulator said the current rules were designed to balance the interests of scheme members with the need for companies to manage their finances as they see fit.
"The current regulatory framework attempts to balance the needs of a scheme and its members with the needs of an employer to invest in their ongoing business," the spokesperson said.
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