LONDON (Reuters) - Britain’s pensions regulator twice ignored requests from trustees of collapsed outsourcing firm Carillion (CLLN.L) to force the company to plug its pension deficit, lawmakers said on Tuesday.
The Pensions Regulator has come under fire for taking insufficient steps to protect pension scheme members of troubled companies, following the collapse of department store chain BHS in 2016.
Carillion collapsed on Jan. 15, with only 29 million pounds ($41 million) of cash left. It had pension liabilities of around 2.5 billion pounds, two parliamentary committees examining Carillion’s collapse said.
The Pensions Regulator did not use any formal powers regarding Carillion while the company was solvent even though trustees urged it to do so in 2010 and then again in 2013, the lawmakers said in a statement.
The regulator opened a formal investigation into Carillion on Jan. 18, three days after its collapse.
“With characteristic alacrity, the Pensions Regulator started its arduous process of chasing money down from Carillion a few days after it was formally announced there was no money left,” said Frank Field, chair of parliament’s Work and Pensions Committee.
The Pensions Regulator said in a statement that while it did not use its formal powers before Carillion’s collapse, its threat to use them in 2013 had a positive impact.
“Our intervention resulted in a significant increase in the amount of money the company was prepared to pay into the scheme,” it said.
“We believed this was reasonable based upon our understanding of the company’s trading strength, as set out in its audited accounts.”
Carillion’s trustees said in a letter to the regulator in 2010, published by lawmakers, that additional deficit payments offered by the company were “not acceptable”. In 2013, in another letter, they said the scheme was “taking a disproportionate amount of risk”.
Carillion’s pension scheme is in the process of transferring to the Pension Protection Fund, a lifeboat for pension funds of failed companies, which will likely mean a loss of benefits for the majority of the 27,500 scheme members.
Reporting by Carolyn Cohn; Editing by Susan Fenton