Trustees of the main Carillion pension schemes wrote to The Pensions Regulator (TPR) requesting “formal intervention” in 2010, according to letters seen by the Work and Pensions Committee.
The cross-party group of MPs, which is investigating the collapse of Carillion and its “giant pension deficit”, says trustees wanted intervention to require Carillion to pay more into its pension fund, given it had posted a 12% increase in dividends in 2010.
In 2013, the trustees wrote to TPR again following an “impasse” in pensions negotiations with the company.
TPR says it intervened after this, which resulted in a “significant increase in the amount of money the company was prepared to pay into the scheme”.
But according to the Committee, the TPR only opened a formal investigation into the failed construction firm on 18 January 2018, three days after it went into liquidation.
Carillion pension scheme members are likely to enter the Pension Protection Fund (PPF). See Carillion goes into liquidation – what is means for your pension fund.
‘I hope the TPR goes after some of the generous bonuses’
Rt Hon Frank Field MP, chair of the Work and Pensions Committee, says: “With characteristic alacrity, The Pensions Regulator started its arduous process of chasing money down from Carillion a few days after it was formally announced there was no money left. I can only assume – and hope – it is going after some of those very generous bonuses."
He adds that the directors also have questions to answer. "These letters suggest the Carillion directors were contemptuous of their pensions obligations. Over two successive 15 month negotiations they refused to give an inch to the pension schemes.
“Their private pleading that the company could not afford more was in stark contrast to the rosy picture – and bumper dividends – being presented to the outside world. Richard Adam, the longstanding finance director, has particular questions to answer.”
Commenting on the news, The Pensions Regulator adds: “When the trustees wrote to us in 2013 to say they could not agree funding plans with the company, we did intervene by threatening to use our powers unless a funding plan was agreed. Our intervention resulted in a significant increase in the amount of money the company was prepared to pay into the scheme. We believed this was reasonable based upon our understanding of the company’s trading strength as set out in its audited accounts.
“The investigation we have now launched is looking at whether there are grounds to use our anti-avoidance powers.”