Alarm bells should be clanging for pension savers across the UK as another big firm founders and crashes into liquidation, according to a retirement expert.
In the aftermath of public services manager and construction giant Carillion collapsing, 20,000 staff and 28,000 more savers belonging to the firm’s 13 direct benefit pension schemes are wondering what has happened to their money and retirement dreams.
The tab will probably be picked up by the government’s pension rescue agency, the Pension Protection Fund, says Nigel Green, CEO of deVere Group, one of the world’s leading financial advice firms.
But this will mean a likely 10% cut in retirement cash for savers who have yet to draw down their funds.
Executives and managers will also suffer a cap on their annual pension payments if the PPF moves in.
Carillion fallout https://t.co/4hY93zy4aR
— Nigel Green (@nigeljgreen) January 15, 2018
Lost money
And while this is going on, MPs are asking questions about the size of the Carillion pension black hole.
In 2015, the deficit stood at £317 million. After another year of rough trading, the company’s pension gap expanded to £587 million. MPs suspect the directors diverted cash that would have been destined to bolster the pension fund to help pay the bills.
“Carillion being forced into compulsory liquidation should trigger alarm bells for pension savers across the UK as it puts a huge question mark over the fate of yet another major pension fund,” said Green.
“The PPF is now to take over payment of pensions for the company’s retirement scheme members. It can be reasonably expected that those members who are not yet drawing their Carillion pension could now experience a drop in their retirement income.
Deeply depressing
“While the PPF is an important and valuable support, UK final-salary pension schemes have an enormous deficit blackhole, which raises the inevitable question of how many more big hits can the PPF take?”
“This deeply depressing, and now all-too-frequent, turn of events should be a wake-up call to pension savers.
“The fact of the matter is that despite rising stock markets and a positive global economic outlook, companies that include some of the biggest brands and household names are struggling to fund their pensions.”
