Treasury silent on plight of privatised 1980s Carillion workers’ pensions

Unions are pressing for the Government to confirm that it will back the pensions of Carillion workers promised their benefits would be secure when their employer was privatised in the 1980s, but the Treasury has declined to confirm such promises exist.

Prospect, the union for private and public sector workers, says a group of Carillion electricity workers could become a key test case for pension protections of former state-backed companies that were privatised.

Prospect has called on the Treasury to confirm it will stand by what the union says was a commitment to ensure workers’ pensions were as secure in the private sector as they would be if they had remained in the public sector. The Treasury declined to comment on the record about the issue when asked by Corporate Adviser.

Where public sector staff were compulsory transferred to Carillion companies between 1999 and 2013, government policy required that they were provided with pension schemes that were broadly comparable to the public schemes they left.

The Pension Protection Fund is currently assessing a number of Carillion pension schemes to establish whether they are viable, or whether they need to enter the PPF. Those schemes include members who were former public sector staff transferred to Carillion.

Prospect says around 10,000 electricity workers were given guarantees about their pensions when the industry was privatised. They were part of the Electricity Supply Pension Scheme (ESPS). Similar, but separate, arrangements have also been made for the rail and transport industries.

The union says the guarantees meant that pensions would be at least as good as what they would have been in the public sector. Prospect says the guarantees prevent the employer or the scheme from making changes which reduce future pension accruals or increase employee contributions. The protections also require that members are no worse off if the scheme is wound up.

Carillion’s collapse now means there are now significant questions about how the guarantees will be upheld for those who worked for the company.

Prospect says the Government’s handling of this situation could set a precedent for how members of similar schemes may be treated in the future.

Prospect general secretary Mike Clancy said: “The statutory pension protections granted at privatisation of the electricity industry were crucial to the success of that endeavour.

“The provision for people working in the industry before it was privatised to be no worse off as a result of a successor scheme, such as the Carillion group of the ESPS, being wound up must now come into effect.

“Tens of thousands of protected persons in the electricity industry and other industries will be watching this situation closely to see that their colleagues in the Carillion group of the ESPS receive their benefits in full.”