The Pensions Regulator (TPR) may force former directors of Carillion to pay towards the failed contractor’s £800m pension deficit.
Construction Manager reports that the news came to light following the publication of a letter dated 11 June from TPR to the Carillion Joint Inquiry, which provided an update on its investigation into whether Carillion and its directors avoided their obligations to the firm’s pension scheme.
In the letter, chief executive Lesley Titcomb said that TPR was investigating its powers to use a Contribution Notice (CN), which can require individuals to pay cash towards a pension scheme or in some cases towards the Pensions Protection Fund (PPF).
The Carillion Joint Inquiry welcomed the news.
In a letter to TPF it said: "Ernst & Young, commissioned by Carillion to model recoveries in the eventuality of a liquidation back in December 2017, suggested the PPF could get as little as £12.6 million. By contrast, our analysis of Carillion’s annual accounts suggests that over the past decade, Carillion’s six main directors pocketed nearly £17m in total remuneration.
"While such amounts will not go far in offsetting the largest bill the PPF have ever picked up, estimated at £800 million, it is surely the case that these directors have benefitted disproportionately at the expense of the pension schemes they should have been funding."
Frank Field, chair of the Work and Pensions Committee of MPs, said: "The Carillion directors continued to line their pockets as the pension entitlements of their workforce evaporated, with the PPF due to shoulder the staggering pension deficit they left behind.
"It appears though that TPR could set its sights on more than those ill-gotten gains, and go after the directors it finds responsible for everything they’ve got.
"We urge TPR to take this opportunity to demonstrate the new direction and vigour it keeps professing. Clear, exemplary action, not words, is necessary now to restore any confidence in its ability do its job and protect the pensions of ordinary people."
A spokesperson for The Pensions Regulator said: "In relation to the pension schemes, TPR has launched an investigation to determine if there is information that suggests we should use our anti-avoidance powers.
"We are one of several agencies who have opened investigations. We want to understand fully what happened, whether or not our anti avoidance powers could be exercised and what lessons can be learned."
The spokesperson added that TPR was not in a position to confirm when its investigations would be concluded.
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TPR has launched an investigation to determine if there is information that suggests we should use our anti-avoidance powers. How much evidence do they need??