PPF set to protect Carillion pension fund

High-earning Carillion workers who pay into the company’s pension scheme should prepare for a cut to their pension provision after the company’s retirement debt is taken over by the government, experts have warned.

The Pensions Protection Fund (PPF) looks set to take on Carillion’s pensions scheme, which currently has a deficit of £580 million, meaning there is not enough money in the scheme to meet promised pension payouts.

Pensions experts said the PPF’S cap on payouts might affect higher earners.

The cap currently stands at £34,655.05.

However, members who have already reached normal retirement age should continue to enjoy 100 per cent of their current pension payments.

Tom Mcphail, head of policy at Hargreaves Lansdown, said: “Whilst the PPF provides valuable security, members who have not yet reached retirement should be prepared for a cut to their pension payouts.

“This will involve an imme- 0 Royal London’s Steve Webb: ‘Scheme is not sunk’ diate cut of 10 per cent, plus the possible loss of some inflation proofing.”

Steve Webb, director of policy at Royal London, said: “Although there is a big shortfall across the Carillion pension schemes, the PPF is financially strong and will be able to pay out pensions in line with its normal rules.

“The deficit in the Carillion schemes will not sink the pensions lifeboat.”

According to the 2016 Carillion annual report, the defined benefit pension scheme had 28,561 members, of whom 12,410 were pensioners receiving payouts.