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The Pensions Regulator (TPR) was alerted about Carillion‘s pension failings twice in the past eight years, but only began a formal investigation into the construction and outsourcing giant after it went bust last month.
A series of newly released letters between the Carillion pension trustees, TPR, and Frank Field MP, chair of the Work and Pensions Select Committee, reveal that the company's directors had refused the trustees' requests to pay more in deficit recovery contributions starting in 2010.
The Carillion trustees had also asked TPR for “formal intervention” in 2010 and 2013 but the regulator only opened the process on 18 January 2018 – three days after Carillion entered liquidation.
The pension dispute started in 2010 when Carillion put forward a maximum level of annual cash contributions of £23m. The trustees stated that £35m per year was affordable as the company was then in good health.
The same letter from the trustees notes that the company proposed that the past service deficit in its group schemes should be met over 15 years, exceeding the 10-year maximum which the regulator suggested was appropriate across all cases.
A further letter to TPR from the trustees in 2013 states that, notwithstanding the growing pension deficit, Carillion did not raise its offer sufficiently despite the trustees having made a reduced offer in line with a more difficult national economic situation.
The company made a “take it or leave it” offer of £33.4m per year over 15 years whereas the trustees had proposed co