You are here: Home - Retirement - Retirement planning - News -

Carillion pension trustees ‘kept in the dark’

Written by:
A committee of MPs has accused failed contracting group of trying to ‘wriggle out’ of its pension obligations for over a decade.

The failed firm has been in dispute with pension trustees for not topping up its scheme in 2008, 2011 and 2013. It had an aggregate deficit of £2bn when it collapsed, compared to just £29m of cash reserves.

The revelation came as part of a Work and Pensions Committee investigation into the way pension investments were managed at the group. A letter to the committee showed last year contributions to the pension funds were deferred until 2019 as a result of the firm’s financial difficulties.

The letter also suggests pension trustees were “kept in the dark” about the state of Carillion’s problems until the end of 2017.

Worried employees may now also be concerned about their pensions as well as their jobs. Employees of BHS and Tata Steel have had to deal with similar concerns. Are they at risk of losing their pensions?

The most important thing to know is that even if the sponsoring employer goes bust defined benefit schemes are protected by the Pension Protection Fund, which pays compensation to scheme members. Defined contribution schemes are run by pension providers, rather than the company itself, so should remain in tact (although there will be a gap in employer contributions).

However, the compensation may not be the full amount if you are below the scheme’s pension age. Many will only get 90% of the expected benefit up to a cap (£37,420.42 in 2016). See more on the Pension Protection Fund (PPF) site and’s ‘Should you be concerned about your defined benefit pension?‘ for more information.

Also, those using the PPF may not get full access to pension freedoms, said Steven Cameron, pensions director at Aegon:“The PPF plays an important role in protecting members of inadequately funded defined benefit pension schemes where their employer becomes insolvent. However, one significant downside is that once in the PPF, individuals lose the ability to choose the best way to take their pension.

“There’s currently a huge demand from individuals seeking advice on transferring from defined benefit to defined contribution schemes, and for many, the reason is to access the pension freedoms the Government introduced in 2015. As things stand, once in the PPF, individuals lose the ability to transfer to a defined contribution scheme and then to choose to draw their retirement income in a flexible way to match their retirement needs.” 

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Are you a first-time buyer looking for a mortgage?

Look no further, get the help you need by searching for your perfect mortgage

Insurance Experts: Are you fully insured? Click here to get a quote.

For a free quote or to speak with an insurance expert call 0800 1218744

NatWest tells landlord to evict tenant on benefits or pay £2.5k

State-backed lender NatWest told one of its landlord customers to throw out a vulnerable tenant on housing ben...

Chancellor hints at cuts to pension tax breaks

The Chancellor of the Exchequer today hinted of curbs to pension tax breaks ahead of the 2018 Budget just two...

The oversight costing homeowners £4,000 a year

As many as one in three homeowners in the UK don’t know what mortgage rate they are on, costing them thousands...

Ryanair jetting towards US flights for £10

Ryanair is on course to achieve its long-held ambition of offering transatlantic flights to the US – and the...

Investing in car parks: a good vehicle for income seekers?

As the search for income continues, many investors are turning to alternatives, with car parks becoming increa...

A quick guide to guarantor loans – in association with Guarantor Loan Comparison

Considering a guarantor loan or becoming a guarantor yourself? Read our essential guide...

Results round-up: Companies to watch this week

Mulberry and more will face the music this week.

Product launches of the week

Select Property Group, Schroders, Leeds Building Society and more have exciting news this week. Awards 2018

Now in their 21st year, our awards recognise the companies offering the best products and services to consumers

Money Tips of the Week

Read previous post:
UK dividends hit record high last year but 2018 ‘will feel sluggish’

UK dividends jumped 10.5% to £94.4bn in 2017 but 2018 will show much slower growth, according to an asset monitor.