Carillion’s pension scheme had a deficit from at least 2007 and attracted the attention of the Pensions Regulator “pretty much from the beginning”, according to a top Carillion trustee.
Carillion direct benefit pension scheme trustees chair Robin Ellison told MPs that the regulator had taken a special interest in Carillion’s pension scheme as its deficit worsened, and that the trustees never agreed satisfactory pension contributions with Carillion. The firm went into compulsory liquidation two weeks ago.
Ellison was giving evidence to the joint Commons work and pensions committee and business, energy and industrial strategy committee inquiry into Carillion’s collapse, at its first hearing today. Yesterday (Monday) joint inquiry co-chair Frank Field claimed Carillion had been trying to “wriggle out” of its pension responsibilities for years.
“We [trustees and Carillion] didn’t ever really get to an agreement on the difference between what the company thought it could afford and what we thought they could afford,” said Ellison, describing discussions as “inadequate”.
“We thought we were entitled to a bit more than the company thought we were entitled to, and that debate continued on pretty much for the 10 years I’ve been involved.”
Ellison also suggested the Pensions Regulator had attended meetings with the trustees since at least 2011, although it did not order Carillion to pay more into the scheme.
Yesterday Field said the the regulator’s response to Carillion’s collapse was a “tentative and apologetic approach [which] does not cut the mustard”.
Ellison also revealed that as late as 14 January, the day before Carillion went bust, its board believed the firm could survive if they could “get over the hump”.
“The hundred thousand dollar question is: was there a business to recover?” he said. “I believed that they [the board] believed that they had a plan for the survival of the company which was manageable. In the end, it wasn’t.”
During the hearing it emerged the trustees had approved pension payment deferrals in September in an attempt to stop the company going bust.
Carillion’s ex-chief executive Richard Howson, chairman Phillip Green, finance directors Richard Adam, Zafar Khan and Emma Mercer, and interim chief executive Keith Cochrane will be questioned by the committees on 6 February.