Carillion’s former finance director described pension payments as a “waste of money”, MPs conducting a parliamentary inquiry into the collapse of the government contractor have said.
MPs referred to the alleged comment during a sometimes savage evidence session that involved heavy criticism of The Pensions Regulator over its grasp of key facts.
The regulator also came under fire for a perceived lack of action to force Carillion to pay enough money into its retirement schemes, which are estimated to be nearly £1bn in deficit.
The company’s failure means the schemes will be absorbed by the government’s retirement scheme lifeboat the Pensions Protection Fund, leaving nearly 30,000 members facing cuts of up to 15% to their pension payouts.
As MPs questioned officials from The Pensions Regulator, the work and pensions committee chair, Frank Field, asked if they had heard former finance director Richard Adam describe pension payments as a “waste of money” during a meeting with trustees.
Three witnesses from The Pensions Regulator said they had not attended the meeting.
Director of case management, Mike Birch, said the regulator threatened to impose increased contributions on Carillion, prompting an increase in payments of £85m spread over 15 years.
“They promised you candy floss in the future,” said Field.
Documents released by MPs earlier in the inquiry showed that trustees believed that an extra £30m per year was necessary to fund the scheme properly.
Field said directors instead chose to pay out “mega dividends” and were boasting to the City about doing so.
He said: “They were shovelling money out to themselves, they were shovelling it to shareholders, why didn’t you get them to shovel it to pensioners?”
The regulator’s chief executive, Lesley Titcomb, who took the job in 2015 after the period under scrutiny, faced criticism for a perceived inability to recall key figures.
She said the organisation should in hindsight have done more to extract higher pension contributions from Carillion.
“We would not have continued so long in that negotiation situation,” she said.
“We need to be clearer, quicker and tougher. We will change further.”
Birch said the regulator was seeking new powers to strengthen its ability to impose payments on companies deemed to be paying too little into pension schemes.