Six of the UK’s largest contracting firms record £730.2m pension deficit

Written by Theo Andrew
14/12/18

Six of the UK’s largest contracting firms, some with leading government contracts, have a combined pensions deficit of £730.2m, according to their financial reports.

Security services firm G4S recorded a £382m deficit in its H1 18 results, while Capita noted a £289m deficit over the same period.

Infrastructure firm Amey recorded a £56.6m deficit at year-end 2017, followed closely by outsourcing giant Mitie Group, which notched up a deficit of £54.8m.

The news follows The Pensions Regulator’s announcement that it has been “working closely” with the trustees of construction company Interserve, following reports it has around £500m worth of debt.

Despite this, the company reported a £32.1m surplus for its 8,500 member defined benefit scheme in its 2018 H1 results, a £67.8m swing from the year end 2017, following a change in indexation on future pension increases from RPI to CPI.

Serco's DB schemes also managed to record a surplus of £20m.

The contractors have also outlined their recovery payments, with G4S paying £21m this year. It added that its triennial valuation is underway and therefore “deficit-repair contributions will be subject to review”.

Capita said it was making “good progress” with trustees of the scheme in regards to recovery payments.

Furthermore, Mitie Group said it had negotiated a recovery plan of £58m over ten years, contributing £3m over 2017/18.

The combined deficit is dwarfed by that of Carillion, which reported over a £900m black hole when it entered liquidation in January 2018.

Unite the Union, which has 1,200 members working across Interserve, has warned that the outsourcing giant could be “Carillion Mark Two” and has called into question the government’s “unhealthy obsession” with the outsourcing of public services.

According to a report in The Times, Interserve was the top recipient of government strategic suppliers in 2017, winning £938m of contracts, followed by Amey and Carillion who received £928m and £897m respectively.

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