Carrilion

The collapse of the huge British concern Carrilion has been all over the news these past weeks.  Apparently, it was known by the government as far back as October that the company was in trouble but from what we know, despite attempts, the company ultimately failed in January and was put into administration.

One of the things that’s come out has been the huge deficit in the company pension scheme.  This will ultimately mean that former Carillion employees will find their pensions are short.  Of course, the pensions regulator, and ultimately the British taxpayers, will foot the bill for some of the shortfall, but my understanding is, that ultimately those with company pensions will find themselves with a lot less than they would otherwise have had if the company had lived up to its obligations.

This is not the first time a company’s employees enrolled in its pension scheme have suffered because of mismanagement of the company.  In recent years Tata Steel and BHS have been among the companies that have failed to deliver what their employees were promised.  All large companies employing thousands of ordinary people whose lives will be changed as a result.

Each and every time I’ve found myself wondering how this can happen.  How is it that a company can underfund its pension scheme, while the well-paid directors, by and large, walk away unscathed?  How is it allowed and how is it remotely legal, and how is it never picked up earlier?

The employees each month saw a pension scheme line on their payslips alongside the lines that detail their other deductions such as tax and national insurance, but the company failed to make the contributions that it was obliged to make.

As any right-minded person knows, withholding a wrongdoing does not make it any less of a wrongdoing.  If anything it makes it worse.

In my opinion, if a company administers a pension scheme to which it states it contributes it should be legally bound to make its contributions. There should be oversight of this, in the same way, that there is oversight of the companies payment of taxes.  Failing to do so should place the directors and officials of the company liable to a criminal penalty that has a real deterrent financial and custodial penalty.  The financial penalty should make the directors liable, not the company itself.  The company may be a legal entity, but fining a company ultimately hurts the company. The company cannot be sacked, a director can.

We simply cannot keep going down this road where company directors operate a company solely for the benefit of themselves and their shareholders while the very workforce that makes those directors and shareholders their money pay the price.  It’s unethical and it’s just plain wrong.