Trustees of six of Carillion’s defined benefit payment schemes could not have done any more to raise contributions, according to trustee chair, Robin Ellison.
Under questioning from Business, Energy and Industrial Strategy and Work and Pensions committee MPs today (30 January 2018), Ellison said that he does not think there is any more trustees could have done, even with the benefit of hindsight, to raise contributions into the pension scheme from its sponsor.
Despite this, a letter from the pensions covenant assessor, first published in February 2012, stated that the construction firm could afford to increase contributions to over £64m per annum, and that Carillion had “historically prioritised other demands on capital ahead of deficit reduction in order to grow earnings and support the share price”.
Ellison said: “It’s a balance as a trustee, we thought we were entitled to more than the company thought we were entitled too … The power of trustees are limited and we can’t force a demand for money.
“We engaged in robust discussions [with Carillion] with inadequate results.”
When grilled by MPs over whether the trustees fought hard enough for increased contributions into the scheme from Carillion, Ellison said: “We over did it at times, we fought pretty hard … Could we have done better? Probably.”
In addition, Ellison said that the finance director of Carillion insisted that “pensions were the highest risk to the board”, but admitted he did not know whether this was true.
Ellison said the company refused his request of borrowing more money in order to pay for pensions contributions, but that he did not push them on their decision to increase dividend payments.
Speaking on his earlier involvement in the scheme, Ellison said they were unsatisfied with the companies contributions but could understand why and described the conflict of interests as a trustee.
“We had to get money for our pensioners and we had to ensure survival of our sponsor and that was a tough case … the crisis had an enormous effect on cash flow”, he said.
Despite this, Ellison suggested that the company disclosed margins of around 5 per cent and that profits were increasing.
Yesterday, Work and Pensions Committee chair, Frank Field said The Pensions Regulator's investigation into Carillion “does not cut the mustard”.
Field’s comments come after TPR said in a letter that it has launched an investigation to determine whether it should use its anti-avoidance powers against the firm.
In a separate letter to Field, Carillion Defined Benefit Pension Trustee Limited chair, Robin Ellison, said TPR was aware of the failed valuations discussions between the trustee and the company since 2008, but decided not to take any action, and had been in regular contact with Carillion since then.
Field also said that TPR had “questions to answer” over its failure to use its powers in the Carillion scandal, despite trustees raising numerous concerns.