Labour has attacked the government over Carillion’s pension scheme deficit and asked why it was allowed to increase while dividends continued to be paid to shareholders.
Earlier this week the outsourcing giant Carillion collapsed. Its auditors PwC said 27,000 members of the company’s defined benefit (DB) schemes ‘will likely’ go into the Pension Protection Fund (PPF). The size of Carillion’s DB deficit is estimated at £587 million, up from £318 million in 2015.
In a letter to The Pensions Regulator (TPR) and the new work and pensions secretary, Esther McVey, Labour’s shadow work and pensions minister Debbie Abrahams has attacked the government for its failure to stop the scheme going into the PPF.
In her letter to TPR chief executive Lesley Titcomb, Abrahams asked her if she was aware Carillion ‘made pensions deficit recovery payments of £47.4 million in 2015 and £46.6 million in 2016, but the dividends to shareholders were higher – £80 million then £82.7 million?’
Abrahams (pictured) asked the new work and pensions secretary McVey if the government was conscious of the potential downfall of the Carillion pension scheme.
‘Given the severity of the financial problems facing Carillion measures should have been put in place last summer to protect the pension scheme and to limit the exposure of the PPF,’ she said.
‘In light of this, when were you or your predecessor first made aware of any concerns about the pension schemes, and in particular when did TPR inform you that this could have implications for the PPF?’
Under section 69 of the Pensions Act 2004, trustees have a duty to report ‘notifiable events’ about their pension scheme to TPR to try and limit the role of the PPF, Abrahams said.
She asked McVey if she had received reports from TPR about the Carillion scheme under section 69 of the Pensions Act.