Bust Carillion ‘should have paid £64m in to its pension’

CARILLION should have paid £64m a year to plug the gap in its pension schemes, experts told trustees.

The collapsed firm came under fire as far back as 2012 for prioritising earnings and its share price ahead of reducing the deficit on its final salary scheme, it emerged yesterday.

Experts told the infrastructure giant it could afford to pay more into the pension fund and warned that trustees should have asked for more given concerns about the firm’s future.

The warnings, made in a letter from 2012 published yesterday, will pile pressure on the company, trustees and pensions regulator over their handling of the firm’s pension schemes.

Carillion went into liquidation on January 12 with a deficit of between £587m and £2.6bn depending on calculations, part of up to £5bn of debt.

Up to 28,500 workers are set to see their retirement incomes cut as the schemes fall into the Pensions Protection Fund.

The letter, published yesterday by the Commons’ Work and Pensions Committee, was from advisers gazelle Corporate Finance to the pension scheme trustees in February 2012.

gazelle said contributions could have increased significantly ‘to above £64m per annum payable to all schemes’.

gazelle also warned that the deficit would be very high if the company went into administration. Carillion paid £46.6m towards plugging its pension deficit in 2016 and £47.4m in 2015, accounts show. Meanwhile, it paid a dividend to shareholders of £79.3m in 2016 and £78.5m in 2015.

The letter emerged as MPs heard yesterday how Carillion’s record keeping has been so poor, liquidators have struggled to find basic information on how many directors it had.

Sarah Albon, boss of The Insolvency Service, said ‘the company hasn’t kept its own records properly up to date’ and the information ‘should have been straightforwardly available’.