With the news that construction giant Carillion has gone into liquidation with a pension deficit of nearly £1bn, Stuart Price, Partner and Actuary at Quantum, explains what will likely happen to the 28,500 employees who have a pension with the collapsed company.
Stuart said: The unfortunate story of Carillion, which is seemingly becoming more frequent, is akin to what happened with BHS but on a much bigger scale.
BHS’s liabilities when it went into administration were in the region of £500m.
Comparably, Carillion operated 13 final salary pension schemes in the UK which accumulated liabilities of around £3.5bn, with assets of around £2.5bn.
All members from the 13 defined benefit schemes will now get Pension Protection Fund (PPF) compensation and therefore it will be down to the PPF to plug the £1bn shortfall across the schemes.
What does this mean for members?
For those above normal retirement age, they will continue to receive their pension in full, but for those yet to retire or those who have retired in good health but are below normal retirement age will receive lower pension benefits than anticipated, with a minimum 10 per cent drop immediately…
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