New Model Adviser - For Professional Investors

Register free for our breaking news email alerts with analysis and cutting edge commentary from our award winning team. Registration only takes a minute.

Carillion collapse: gov't dodges more calls for pension commission

3 Comments
Carillion collapse: gov't dodges more calls for pension commission

The secretary of state for work and pensions has dodged calls for an independent pensions commission in the wake of the collapse of Carillion.

During a parliamentary debate which followed an urgent question from shadow work and pensions secretary Debbie Abrahams on 'private pension abuse', Scottish National Party (SNP) MP for Airdrie & Shotts Neil Gray stood up to ask for both a pensions commission and further regulatory powers to allow governments to prevent future pension schemes from falling into the Pension Protection Fund (PPF).

'That we're talking about private sector pensions again highlights the fundamental need to address the regulation of the pensions industry, something which the SNP has been calling for for years but until now has fallen on deaf ears,' he said.

'[The] BHS pension scheme was in deficit by more than £500 million, Carillion is estimated to be up to £900 million in the red, and there are over 5,000 other private sector defined benefit schemes in deficit to the tune of £900 billion, a ticking time bomb for savers.

'But the real issue is, while top executives make bad decisions and are rewarded for it, 11 million people who rely on a final salary pension could still be at risk of having the rug pulled from under their feet and facing reduced entitlements, should BHS or Carillion's cases continue to be repeated.

'The SNP has long called for the establishment of an independent pensions commission to ensure that employees' savings are protected and a more progressive approach to savings is considered. Alongside this, will the UK government make sure that The Pensions Regulator is now tasked with the appropriate authority to step in and protect the interests of savers and pensioners before cases like that of BHS or Carillion happen again?'

But responding for the government, secretary of state for work and pensions and MP for Tatton Esther McVey defended the government's record on pension regulation, making no indication that a pensions commission would even be considered.

'Well the Pension Protection Fund is there to do just that, to support the pensioners and they do step in and support them where necessary,' she said.

'You're quite right, where businesses have not worked responsibly we should be getting involved there and we did do that when we saw the condition [of the BHS]. What happened there, anti-avoidance enforcement did take place, £363 million was got back, and therefore we didn't have to use the PPF fund and also a prosecution [of former BHS-owner Dominic Chappell] did take place, so all of these instances have been different, but you're quite right, where there has been an abuse of the system, we will do an investigation and bring those people to account.'

BHS collapsed in 2016 after it was sold by businessman Philip Green to former racing driver Dominic Chappell for just £1.

Speaking after McVey, Conservative MP for Gloucester called for a BHS-style joint inquiry by the business and work and pensions committees into the collapse of Carillion. His suggestion was ignored by McVey, however.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Comment & analysis

Twitter