The U.K.’s Pensions Regulator, the government agency that monitors workplace savings schemes, has defended its actions to protect collapsed U.K. construction group Carillion’s defined benefit pension scheme after the government’s Work and Pensions Committee chairman suggested the regulator failed to chase down cash until the business was insolvent.
At the time of Carillion’s collapse, the company had a pensions deficit of £990 million ($1.38 billion). On Tuesday, letters from the trustees of the pension scheme from 2010 and 2013 were released publicly, showing that the trustees asked the Pensions Regulator to intervene twice before.
The revelation exonerates the trustees for at least some of the blame leveled at them during an evidence session in January for not pushing the regulator to invoke its powers to force the company to pay in more prior to its collapse.
Commenting on the letters, a spokesman for The Pensions Regulator said the watchdog had “threatened” to use its powers unless a funding plan was agreed in 2013, noting that this led to a significant increase in funding received by the pension scheme at that time.
The spokesman declined to disclose the amount secured as a result of the regulator’s intervention, saying that the figure was not being made publicly available at this point in the investigation.
“Our intervention resulted in a significant increase in the amount of money the company was prepared to pay into the scheme,” he said in an e-mailed statement to Institutional Investor. “We believed this was reasonable based upon our understanding of the company’s trading strength as set out in its audited accounts.”
The spokesman added that the regulator is currently deciding whether there are grounds for it to use its so-called anti-avoidance powers, which allow the regulator to take action against an employer if the company’s actions are deemed to have caused “material detriment” to the scheme’s ability to provide benefits.
Despite the Pensions Regulator’s ongoing investigation, Frank Field, Member of Parliament and chairman of the Work and Pensions Committee, released a separate statement on Tuesday, implying that the watchdog was too slow to take action.
“With characteristic alacrity, The Pensions Regulator started its arduous process of chasing money down from Carillion a few days after it was formally announced there was no money left,” he said in the statement. “I can only assume — and hope — they are going after some of those very generous bonuses.”
[II Deep Dive: Carillion Bosses Grilled on Pension Priorities]
Field admonished the directors of Carillion as having been “contemptuous of their pensions obligations” in the lead-up to the business’s collapse.
“Over two successive 15-month negotiations they refused to give an inch to the pension schemes,” he said in the statement. “Their private pleading that the company could not afford more was in stark contrast to the rosy picture — and bumper dividends — being presented to the outside world.”
Field’s criticism follows an evidence session at the beginning of the month in which the committee frowned on evidence given by the company’s directors.
On Thursday, the committee is scheduled to hear further evidence from The Pension Regulator’s chief executive Lesley Titcomb, who will be quizzed about the organization’s actions throughout the affair. Also appearing to give evidence from the regulator will be Mike Birch, its director of case management, and Nicola Parish, its executive director of frontline regulation.