Carillion pension schemes

Carillion has 13 UK defined benefit pension schemes with 27,000 members. Since the company’s entering compulsory liquidation on 15 January 2018, 12 have entered a Pension Protection Fund assessment period (PQ 905457 21 May 2018).

In the report of their inquiry into this on 16 May 2018, the BEIS and Work and Pensions Committee called on the Government to carry out an ‘ambitious and wide-ranging set of reforms’ to ‘reset our systems of corporate accountability.’  They said that a “system of internal checks and balances were support to prevent board failures of the degree evidence in Carillion” had failed. As regards the pension schemes:

The key regulators, the Financial Reporting Council (FRC) and the Pensions Regulator (TPR), were united in their feebleness and timidity. The FRC identified concerns in the Carillion accounts in 2015 but failed to follow them up. TPR threatened on seven occasions to use a power to enforce pension contributions that it has never used. These were empty threats; the Carillion directors knew it and got their way.   (Work and Pensions and BEIS Committee, Carillion, HC 769, May 2018, Summary)

In response, Chief Executive Lesley Titcomb said TPR had made changes to strengthen its regulatory approach and would continue to do so:

We are now a very different organisation; we are clearer about what we expect, quicker to intervene and tougher on those who do not act in the interest of members. We have reinforced our regulatory teams on the frontline and are embedding a new regulatory culture. We sought stronger and clearer powers on scheme funding from DWP and we are working with the Government on how to implement the changes in the white paper, alongsider our wider changes to how we regulate. (Response to Report of the BEIS and Work and Pensions Select Committees, 16 May 2018).

For more on the background, see Library Briefing Paper CBP 8206 The collapse of Carillion (March 2018).