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You'd like to think that the contracts will be taken on by former competitors and that whoever takes them on also needs extra man power to carry them out, similar happened when the IT managed service company 2e2 went into administration, 1800 people were made redundant over the course of the first week in administration, nearly all of them were back in work within a month either by direct employment from the clients or with former market competitors who picked up some contracts.

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1 hour ago, Deker said:

You'd like to think that the contracts will be taken on by former competitors and that whoever takes them on also needs extra man power to carry them out, similar happened when the IT managed service company 2e2 went into administration, 1800 people were made redundant over the course of the first week in administration, nearly all of them were back in work within a month either by direct employment from the clients or with former market competitors who picked up some contracts.

I hope and think that is what will happen in the majority of cases in the UK.  Many major contracts are shared in a consortium (e.g HS2 - of which Carillion is 1/3 with I think two off Amey, Costain, Kier Group and/or Balfour Beatty possibly the other two members) and it is to be hoped that the other consortium members will take on the staff.  Rather over half of Carillion's business was overseas - and it may be harder there. 

What should not happen is the Government/Civil servants take over (effectively nationalisation) - running businesses that are struggling is not what the civil service are trained for or do well, and that will cost the taxpayer very heavily in the long run.

I understand from the press coverage that the current pensioners (i.e. those already retired) will have their pensions maintained by the Pension Protection Fund (PPF).  Those who have not yet retired, but were in a final salary (defined benefit) scheme may see a reduction in expected pension (I have seen 10 - 15% reduction quoted).  I have no idea how many are in this category, but understand (from the Telegraph) that "Carillion has 13 final salary schemes in the UK with 28,500 members" - it is not stated how many of these are currently retired and how many are still working.  That is a lot of people and it is clear that this type of scheme was not just for 'senior management'.

Edited by JohnfromUK
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I think it's obvious where the fault lies. Clearly the renumeration wasn't enough to get the best people in place at the top, the CEO was rumoured to be on a mere £700,000 p.a. plus bonuses. This isn't nearly enough to attract the type of high calibre old boy network executives required to fill a post with this amount of responsibility and complexity. For, as we all know, to attract the very best people into the very best jobs you need to pay considerably more than this kind of trifling salary.

The best calibre candidates always respond to a reward based system that commensurate to their class and education whereas the rest of us respond better to austerity, wage stagnation and a lack of any job security, or in other words, the disciplines of the 'free market economy'.

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1 hour ago, mick miller said:

I think it's obvious where the fault lies. Clearly the renumeration wasn't enough to get the best people in place at the top, the CEO was rumoured to be on a mere £700,000 p.a. plus bonuses. This isn't nearly enough to attract the type of high calibre old boy network executives required to fill a post with this amount of responsibility and complexity. For, as we all know, to attract the very best people into the very best jobs you need to pay considerably more than this kind of trifling salary.

The best calibre candidates always respond to a reward based system that commensurate to their class and education whereas the rest of us respond better to austerity, wage stagnation and a lack of any job security, or in other words, the disciplines of the 'free market economy'.

I heard an interesting report on their tendering which suggested they very often would be bidding below cost to try and kill off competition in various areas, they then subcontract out to firms who have to charge a slightly more sensible rate and have to find any extra pennies they can. Essentially it seems the buisness model was selling ten pound notes for a fiver. 

 

On the pensions note I understand many of the nhs contracts made big theoretical overall savings for tax payer liabilities vs in house staff as the workers could not access the nhs pension, but were often paid better salaries than the nhs staff they replaced (contribution rates for the generally low earners in point for the nhs scheme are eyewateringly low). The initial costs were higher but with no ongoing liability post retirement. I find the idea that Carillion were still operating a particularly generous pension scheme suprising as part of the model for public sector contracts seemed to be based on using staff who were in the long run cheaper by passing the staff much more of the responsibility for saving appropriately for their pensions, avoiding a recurring bill to the tax payer. 

 

Carillion didnt seem too bad to work for, i remember talking to one group of cleaners contracted through them who saw their weekend night rate go from £12 an hour to £25. They did work damn hard for it though. 

 

Edited by Wb123
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18 hours ago, JohnfromUK said:

From "The Telegraph" - Carillion has 13 final salary schemes in the UK with 28,500 members

Thank you JohnfromUK. I've been looking in to this a bit more. Why o why didn't the management change anything? 

There can be a big difference in Final Salary Schemes. In the private sector (where Carillion sit) they should have lessened the terms, should they not?

For example many schemes changed in the private sector from non-contributory  2/3rds ( 40/60th) final salary ( non- contributory ) to for e.g. Contributory 80th Schemes where members had to make a contribution. 

The management are wholly responsible for this oversight as they must have known that the pension pot's were unsustainable given the investment returns available and of course the annuity rates on offer.  

There is no way on earth that these pensions were ever going to deliver the terms members expected. 

It would seem that these deficits will be supported by the Pension Protection Fund (PPF). Isn't that funded by the tax payer?                

Edited by Whitebridges
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27 minutes ago, Whitebridges said:

I've been looking in to this a bit more. Why o why didn't the management change anything?

Since Carillion was 'assembled' from other companies (Tarmac being one) it is possible they 'took on' these arrangements.  I don't know.  I also believe it isn't always simple to change these things once they are written into terms of employment and/or undertakings made when the original company was absorbed into Carillion, but again, I don't know the full 'ins and outs'.

I also don't know where the boundary lies between the 'management' and the 'pension fund trustees' - and who has responsibility for what.

 

28 minutes ago, Whitebridges said:

Isn't that funded by the tax payer?

I think I read it is funded by a levy on 'all pensions', but I haven't looked into what that really means - I suspect it is the private pension companies, but I don't know.  They have a website ........ http://www.pensionprotectionfund.org.uk/Pages/homepage.aspx

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Take a gander at this if you will:

http://www.pensionprotectionfund.org.uk/Pages/homepage.aspx

Smacks of civil servants to me.

Believe me there are a lot of white collar workers rubbing their hands in glee at the extra work they are going to get sorting out the mess.

Oh and I see Labour are calling for an enquiry and rightly so. That's going to be cheap isn't it.

The really bad thing is this whole thing will impact on us leaving the EU at pace. Sadly, I think it's all been done by design i really do.     

 

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39 minutes ago, JohnfromUK said:

Since Carillion was 'assembled' from other companies (Tarmac being one) it is possible they 'took on' these arrangements.  I don't know.  I also believe it isn't always simple to change these things once they are written into terms of employment and/or undertakings made when the original company was absorbed into Carillion, but again, I don't know the full 'ins and outs'.

I also don't know where the boundary lies between the 'management' and the 'pension fund trustees' - and who has responsibility for what.

 

I think I read it is funded by a levy on 'all pensions', but I haven't looked into what that really means - I suspect it is the private pension companies, but I don't know.  They have a website ........ http://www.pensionprotectionfund.org.uk/Pages/homepage.aspx

Here is half a clue:

Your role in a scheme offering defined benefits (DB)
As a trustee of a scheme offering DB benefits, you have a responsibility to ensure there is enough money in the scheme to pay members’ pensions as and when they need to be paid.

To see how much money is in the scheme, you have to arrange for a ‘valuation’ to be carried out, no less than once every three years. This assesses the assets and the liabilities of the scheme. You need to appoint a scheme actuary to carry out this process. If the scheme is not fully funded, you must draw up a recovery plan and submit it to the regulator within 15 months of the effective date of the valuation.

The recovery plan sets out how much will be paid into the scheme and over what period.

In most cases, you have to agree the recovery plan with the sponsoring employer.

You also have to be responsible for monitoring scheme investments and keeping an eye on the financial strength and health of the employer who is standing behind the scheme.

Extract from this:

http://www.thepensionsregulator.gov.uk/trustees/role-trustee.aspx

But with the fall back position of the pension protection fund do 'pension fund trustees need to give a ****?

Laughable.  

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3 hours ago, mick miller said:

I think it's obvious where the fault lies. Clearly the renumeration wasn't enough to get the best people in place at the top, the CEO was rumoured to be on a mere £700,000 p.a. plus bonuses. This isn't nearly enough to attract the type of high calibre old boy network executives required to fill a post with this amount of responsibility and complexity. For, as we all know, to attract the very best people into the very best jobs you need to pay considerably more than this kind of trifling salary.

The best calibre candidates always respond to a reward based system that commensurate to their class and education whereas the rest of us respond better to austerity, wage stagnation and a lack of any job security, or in other words, the disciplines of the 'free market economy'.

All very true !

There`ll be some fat cats licking the cream off their whiskers right now thinking how well they`ve done for THEMSELVES.

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14 minutes ago, old man said:

20.000 jobs at risk?

Cause? Inept politicians advised by equally inept ministers and backroom staff.

The work still needs doing, about 20,000 jobs doing it exist but will end up being done via another company who will have a sudden and unexpected need for labour once the dust settles...

Edited by Wb123
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5 minutes ago, Whitebridges said:

If the scheme is not fully funded, you must draw up a recovery plan and submit it to the regulator within 15 months of the effective date of the valuation.

I am assuming that since the Pension Protection Fund (PPF) was already 'primed' to this situation (presumably as a 'high probability' of failure), this part had been done - but the Carillion management were unable (due to lack of funds) to follow through on any recovery plan (if indeed one was agreed) ....... hence the known deficit situation.

I have not heard/seen any blame pointed at the trustees as yet anyway.

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2 minutes ago, JohnfromUK said:

I am assuming that since the Pension Protection Fund (PPF) was already 'primed' to this situation (presumably as a 'high probability' of failure), this part had been done - but the Carillion management were unable (due to lack of funds) to follow through on any recovery plan (if indeed one was agreed) ....... hence the known deficit situation.

I have not heard/seen any blame pointed at the trustees as yet anyway.

It's very normal for senior managers to also be trustees of their company pension schemes. 

I can't find any hard core legal precedent versus pension scheme trustees. Mungler will know if there is anything.

Most of the naughty boys get a tap on the nose via The Pensions Regulator (TPR). 

http://www.thepensionsregulator.gov.uk/press/tpr-names-pension-schemes-whose-trustees-failed-to-complete-their-basic-duties.aspx

Complete lack of individual accountability all round the pensions arena.  

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16 minutes ago, panoma1 said:

I hear in the media the former CEO who resigned after the first profit warning, is still drawing his £600,000pa plus salary!

So he'll not be queuing at the food bank any time soon!

......and the Ba&t$d will probably be using this figure in his "last three best years" for his final salary pension.

It makes me cry for the hard working and genuine working class populace .     

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1 hour ago, panoma1 said:

I hear in the media the former CEO who resigned after the first profit warning, is still drawing his £600,000pa plus salary!

So he'll not be queuing at the food bank any time soon!

Yep, no food bank queue for these...

Howson earned £1.5m in 2016, including £591,000 in bonuses. He continued to work for the firm until last autumn after stepping down as chief executive and is due to stay on the payroll, receiving his £660,000 salary and £28,000 benefits for another year, until October 2018.

Howson’s replacement, the interim chief executive, Keith Cochrane, was a Carillion non-executive director who joined the company in July 2015. He was due to step aside in favour of a new permanent chief executive next week – but Cochrane is also set to keep on receiving his £750,000 base salary until July.

The former finance director Zafar Khan, who stepped down last September from his £425,000 a year job, is also due be paid until July.

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Not been much cop for some years now, but still managed a nice bonus for their execs.
This is probably from the millions they still owe their subbies like a lot of top heavy, mismanaged companies.
Feel very sorry for the working staff and their families but it should'nt leave the tax payer to bail it out.

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1 hour ago, das said:

Not been much cop for some years now, but still managed a nice bonus for their execs.
This is probably from the millions they still owe their subbies like a lot of top heavy, mismanaged companies.
Feel very sorry for the working staff and their families but it should'nt leave the tax payer to bail it out.

The subbies and small business owners will be the ones getting shafted by this. But you know, I'm sure something will trickle down to them, eventually.

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In a fair society the obscene salaries and other perks paid to top executives (often influenced by themselves) in the run up to and after the business goes bust....should be taken off them to pay off the companies debts to their employees, suppliers and sub contractors!

After all, they are employed and paid to do the job of running the company, consequently they are the ones responsible when it fails.....why should they be paid for not doing the job they are paid to do?

Edited by panoma1
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It is not just Carillion though:

I took a quick look at the UK contractors for HS2, only 3 out of 10 at first look are British:

Balfour Beatty - Pension deficit £3.4 Billion !!!! in 2017, other debt of £966 million.  (figures from Motley Fool)
Sir Robert McAlpine - £100 million pension deficit, £100 million loss in 2 years, 2013-2015. Profit for 2016 £1.6 million
Costain - Pension deficit £33 million, Revenue £1.1 billion which gave them a profit of £28 million or 2.5% before Tax

Can any one see good news here? 

RS

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