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16 minutes ago, RockySpears said:

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

And how much are their top executives being paid? What perks both financial and material are they receiving? How can the companies pensions be allowed to continue in deficit, when they are recording substantial profit, and presumably paying their shareholders a dividend?

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43 minutes ago, panoma1 said:

And how much are their top executives being paid? What perks both financial and material are they receiving? How can the companies pensions be allowed to continue in deficit, when they are recording substantial profit, and presumably paying their shareholders a dividend?

Total it all up I bet it comes no where near £3.4 billion.  Top exec pay is mostly irrelevant as using the money for the lower paid  would give each employee a negligible amount, let's say that the top guys are over paid £10,000,000 a year, by 20,000 employees that is £500, not going to change much is it?  Not even a new gun.

  Pensions are not the companies issue are they?  That is for the Pension Trustees to sort out, surely the company is only on the hook for their legally required contributions and not any deficit incurred by mal-investment or poor yields?

  The numbers are just too big, the debt and the losses too much to pay back even at 0% interest because the money borrowed was to off-set losses or buy-back shares and not invested in the company to produce better profits from increased productivity.  A lot is said about productivity these days, and the way the MSM portray it it is due to lazy employees, whereas most increases in productivity come from investment in new machinery/systems and processes and that simply is not happening.

  Could be that inflation will save the day, good dose of inflation lessens the debt burden tremendously.  Many of our parents/grandparents had huge chunks of their mortgage inflated away, leading to them doing well for the most part, but the legacy is coming home to roost.

  The Bank of England (and all the other Central Banks) have created a monster they cannot control any more.   Reducing borrowing costs to near zero means that every one has binged on cheap credit.  If inflation continues its climb, the only tool the BoE has in its toolbox is Interest Rates and normalising them will kill all these companies all the quicker with the interest due on Debt.  The mortgage holders will struggle, which means that they will not buy extra things, which, paradoxically, leads to Deflation, probably a more deadly economic situation than Inflation as people (especially those without mortgages or debt) put off any spending today, knowing things will be cheaper tomorrow.

 

  We live in Interesting Times,

 

RS

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46 minutes ago, RockySpears said:

  Pensions are not the companies issue are they?  That is for the Pension Trustees to sort out, surely the company is only on the hook for their legally required contributions and not any deficit incurred by mal-investment or poor yields?

That is not necessarily (or indeed usually) true because the trustees have to function like this (quoted from an earlier post by Whitebridges) to carry out their responsibilities.

"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."

Now the recovery plan that will have been submitted to the regulator (and agreed by him/her) is highly likely to require more to be paid into the scheme from the Company, hence the deficit falls on them.  Where else would the trustees (some of whom are often board members anyway) get the necessary money?  This makes sense because it is the Company who has offered and granted the pensions to the (both legacy and present) employees - and they have a legal responsibility to follow through on what they have promised.  The trustees are there to administer the scheme, but have no 'revenue steam' other than the Company and income generated by the scheme itself.

Many many defined benefit pension schemes are in deficit, and the route cause is often the same that has hit people with endowment mortgages - namely the 'market' has not met the performance predictions that were used in setting up the scheme economics in the first place.

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Regarding pension  funds. I'd really like to know how they would have been doing if Gordon Brown hadn't pillaged them.

Would some/ all of the end  of salary  based pensions still be viable and would the current shortfalls have happened? 

 

 

Edited by Paul1440
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5 minutes ago, Paul1440 said:

Regarding pension  funds. I'd really like to know how they would have been doing if Gordon Brown hadn't pillaged them.

Would some/ all of the end  of salary  based pensions still be viable and would the current shortfalls have happened? 

 

 

Since many endowment policies have also experienced shortfalls, I suspect that pensions would not be in a perfect place - but it would be better than where many are now.  I cannot say how much better.

Edited by JohnfromUK
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20 hours ago, Bazooka Joe said:

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.

Can turning a major **** into a lesser one not be a good job if that is the best that is possible? If so why shouldn't they be rewarded for a job well done?

 

Good management can be a case of working out how to have a system fail least disasterously and minimising fallout if a company is in a irretrievable position. It sounds like plans were made and managed to keep this show afloat for two or three years after it might have collapsed. 

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1 hour ago, Wb123 said:

Can turning a major **** into a lesser one not be a good job if that is the best that is possible? If so why shouldn't they be rewarded for a job well done?

 

Good management can be a case of working out how to have a system fail least disasterously and minimising fallout if a company is in a irretrievable position. It sounds like plans were made and managed to keep this show afloat for two or three years after it might have collapsed. 

Sound like something a highly paid senior executives running Carillion might say!.........."We may be responsible for driving the business into the ground (whilst still picking up our inflated salaries)..........but it could have been worse....it could have happened a month or two ago!".............That's a novel way of explaining abject failure!!

If they knew it was going "mamories up" 2/3 years previously, why the **** didn't they do something about it then?

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59 minutes ago, panoma1 said:

Sound like something a highly paid senior executives running Carillion might say!.........."We may be responsible for driving the business into the ground (whilst still picking up our inflated salaries)..........but it could have been worse....it could have happened a month or two ago!".............That's a novel way of explaining abject failure!!

If they knew it was going "mamories up" 2/3 years previously, why the **** didn't they do something about it then?

They did, brought in new management, pulled out from several markets that were not proving profitable, sold on some parts that could raise cash to steady the ship, looked to make themselves too vital to be politically allowed to fail, but it wasn't enough. Arguably the liabilities accumulated by that point were too big to recover from without either a huge change in pensions liabilities a lot of new investment, or both.

 

Pensions liabilities for defined benefit schemes are a huge problem, a friend was involved with a family firm which was producing 80% of the European supply of their product, profiting around a million a year, but would never in their market be able to profit enough to honour the old defined benefit liabilities run up in the 70s and 80s for a now very very generous pension scheme. Apparently the best long term option to secure its future was to attempt an asset strip and wind down with a view to liquidating what was left and establishing a new company without the old liabilities. Makes me feel very uneasy about my defined benefit pension.

 

Edited by Wb123
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  • 2 weeks later...
On 1/16/2018 at 10:07, RockySpears said:

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

  If only I had mentioned Capita!

http://www.bbc.co.uk/news/business-42885211

RS

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