Carillion collapse: MPs’ alarm for Carillion pensioners

The Commons Work and Pensions Committee criticised the collapsed outsourcing giant after publishing a letter from Robin Ellison, chairman of trustees of Carillion's pension scheme, which gives an account of the firm's pension scheme.

Carillion's liquidation left in its wake a £900 million debt pile, a £590 million pension deficit reported by the firm, and hundreds of millions of pounds in unfinished public contracts.

Mr Ellison's letter suggests the pension deficit could be even higher at £990 million, the committee said.

Carillion has been "falling short" of what trustees expected it to contribute to pension schemes since 2008, the MPs said after seeing the letter.

The company cited cash flow problems as a reason for not making higher pensions contributions in 2011 and 2013, but paid more than £70 million in dividends in both those years.

The trustees were also "kept in the dark" about the state of Carillion, only having access to information that was "largely" in the public domain until last May.

And finally, the trustees "negotiated away" pension deficit contributions in the autumn in an effort to keep Carillion afloat by enabling more borrowing, the MPs said in comments that will ratchet up pressure on Mr Ellison ahead of his appearance before the committee tomorrow.

Committee chairman Frank Field said: "It's clear Carillion has been trying to wriggle out of its obligations to its pensioners.

"The purported cash flow problems did of course not prevent them shelling out dividends and handsome pay packets for those at the top.

"This culminated in negotiating deficit contributions away entirely last autumn to enable more borrowing.

"Remarkably, this was endorsed by the trustees and The Pensions Regulator (TPR)."

TPR said: "The content of Carillion's recovery plans did not highlight sufficient concern to justify the use of our powers based on the group's trading strength as presented at the time.

"However, it is clear from the company's announcements since July that their underlying profitability was significantly weaker than market understanding or the position set out in prior year accounts."