The Carillion Pension Scheme Enters the PPF and lessons to be learnt for those in a final salary scheme

Written by Sam Brooks, Private Client Adviser


At W1 Investment Group we’ve been asked dozens of times in the last month about the process for Carillion Pension holders should the company fail to receive a bail out and the administrators are called in, which happened earlier this morning. The news we’ve had to give them is mixed. The Government Pension Protector Fund was at hand to step in and safeguard the majority of the accrued benefits and we wanted to answer some of the more common questions in this post to hopefully allay some of the worst fears.

Current State of the Carillion Pension Scheme

Carillion actually managed and maintained 13 final salary pension schemes in the UK with just over 28,500 members. The schemes have a combined total funding deficit of £587m and this morning entered the Pension Protection Fund.

What is the Pension Protector Fund (PPF)?

The UK Department of Work and Pensions maintains and funds the PPF through a levy charged to solvent pension funds. As of March 2017, it had £6.1bn of cash reserves as well of total assets of £28bn and is big enough to cope with the Carillion Pension deficit of £587m although that figure could balloon to £1.4bn now the firm has been forced into administration due to the way pension deficits for collapsed companies are calculated. That would leave the Pension Protection Fund on the hook for around £800m after saleable assets were used to lessen the hit.

What effect does the PPF have on pension benefits?

Now that the various Carillion Pension Schemes have been forced to enter the PPF then it will certainly hit the savings of Carillion’s employees. Pensions expert Tom McPhail of Hargreaves Lansdown said while those who have already retired would receive their pensions in full, others would lose between 10pc and 20pc of their entitlements.

He said: “They’ll see an initial reduction of 10pc plus they may lose some of their inflation proofing and higher earners may have some of their pension capped.”

A benefits cap would also be applied for any member wishing to retire before the schemes normal retirement age.

What can you do next if you are a member of the scheme now it has entered the PPF?

If you are a member of the Carillion Pension Scheme then you must remain within the scheme and no longer have the choice to transfer your benefits out.

Lessons to be learnt

If you are a member of a final salary pension scheme and you are worried about the scheme’s viability in the future, or if you haven’t received a statement in the last year from your administrator or if you would simply like to find out what flexible benefits are available to individuals transferring out (such as flexible drawdown or leaving all accrued values to your spouse or children) then email us at and a member of our team will get back in touch.

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