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Carillion 'tried to wriggle out' of pension demands

Carillion has been accused of attempting to “wriggle out” of pensions obligations while paying out tens of millions in shareholder dividends and pay for bosses.

The Commons Work and Pensions Committee has said the firm’s pensions deficit could stand at £990m – far higher than the £590m previously reported by the company’s former chief executive – and that it had been falling short of pension scheme contributions since 2008.
While the company claimed cash flow problems had stopped it making higher pensions contributions in 2011 and 2013 it had paid more than £70m in dividends to shareholders in those years, MPs pointed out.
“It’s clear that Carillion has been trying to wriggle out of its obligations to its pensioners for the last 10 years,” committee chair Frank Field said.
“The purported cash flow problems did of course not prevent them shelling out dividends and handsome pay packets for those at the top.”
The damning assessment follows the publication of a letter from Robert Ellison, chairman of trustees at Carillion’s pension scheme, which gives an account of the scheme.
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MPs have also said that trustees “negotiated away” pensions deficit contributions entirely last autumn, to enable more borrowing in order to keep Carillion afloat.
Trustees were “kept in the dark” about the state of Carillion, they added, being provided only information that was largely in the public domain until May 2017.
Mr Field said the allegations leave the pensions regulator with questions to answer.
“They have been sniffing around Carillion – at the trustees’ behest – since at least 2008, though it is not apparent to what effect,” he said.

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“When 10 years later the company collapses with £29m in the bank and £2b in pension liabilities it doesn’t look good for them.”
Mr Ellison is due to be questioned in person in a joint inquiry by MPs on Tuesday.
The collapse of Carillion has forced the Government to step in to guarantee public services that range from school meals to road works.
Sky News reported 10 days ago that the company’s total liabilities could hit £5bn – including an accounting deficit of £2.6bn in the pension scheme.
Tom McPhail, head of policy at financial management firm Hargreaves Lansdown, said of the MPs’ report: “It is easy to criticise the actions of the trustees and the regulator with the benefit of hindsight.
“In spite of last year’s profits warning, it was far from certain to outside observers the company was about to go bust.
“The trustees took a decision to try and save the company, rather than refusing to cooperate in its attempts to finance its cash flow.

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“In general, by far the best outcome is for the sponsoring employer to continue to trade and pay pension contributions in the future. The problems really start when as now, the company goes bust and the music stops.”
The so-called ‘big four’ auditors – Deloitte, EY, KPMG and PricewaterhouseCoopers (PwC) – have received letters from the Business and Work and Pensions select committees ‎demanding that they reveal work they had undertaken for Carillion since 2008.

Source: Sky

About Business Ideas UK

My name is Joel Bissitt. I have been an entrepreneur for 24 years and have run many small businesses across various sectors. For the last 10 years I have worked mainly within online media, franchising and small business start-ups.

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