Following today’s (Monday 29 January) revelation that Carillion’s pension deficit is at least £990 million, Unite, the UK’s largest union, is calling for all possible legal avenues to be explored to recoup money and for the introduction of stronger laws to prevent future scandals. Contributor Gail Cartmail, Assistant General Secretary – Unite.
It has emerged that the pension regulator allowed Carillion to defer its pension payments for 2017 until 2019. As a result of the company’s collapse, Carillion’s pension schemes will be transferred to the Pension Protection Fund. This will result in existing pensioners having lower increases in future, while other members of its schemes will see the value of their pension, fall by about 15 per cent.
Unite assistant general secretary Gail Cartmail said: “The scale of the deficit is astronomical; it is disgraceful that the company continued to pay shareholders dividends and to pay bonuses to its senior staff, while the pension black hole was allowed to spiral out of control. “Members of Carillion’s pension schemes will pay for the greed of the directors and the shareholders for the rest of their lives, with vastly reduced retirement incomes.”
That greed is manifested in the actions of former chief executive Richard Howson who received £6 million in pay and perks in the five years before resigning in July 2017 when Carillion was first forced to issue a profit warning. Howson also received a whopping 40 per cent of his salary as pension contributions. However, and despite his resignation Howson continued to be paid a basic wage of £55,000 a month.
It has also emerged that in 2016 Carillion changed its pay policy making it far more difficult for director’s bonuses to be repaid if the company then ran into financial problems. Gail Cartmail added: “Every legal avenue needs to be explored to discover if money can be reclaimed from directors and shareholders and if those responsible can be prosecuted.”
“It is outrageous that those responsible, who were lining their pockets while Carillion collapsed, could escape scot-free. The Carillion crisis demonstrates once again that existing pension laws are far too weak. The actions of the pension regulator need to be urgently reviewed and if necessary its powers strengthened.”
“Yet again the government has been caught sleeping on the job and its processes have been found not fit for purpose. New laws must be introduced which mean that bosses who benefit at the expense of pension members are suitably punished.”