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With the unfolding drama of the Carillion collapse which includes ignored profits warning, excessive shareholder payouts and CEO bonus payments, a new player has entered the stage. It was revealed in a recent High Court hearing that Carillion has an estimated 2.6bn pension’s black hole. Five times higher than the former CEO of Carillion led everyone to believe.

In many ways, Carillion and the BHS collapse highlights how imperative it is that you have your own pension scheme up and running, separate from your employer’s scheme.

The actions of both Carillion and BHS management have been found to put you, the employee, at the bottom of the pile. As such, should a giant go into liquidation, pension funds may not be honoured leaving many in a kind of pensions ‘no man’s land’ where shortfalls in retirement funds are inevitable.

Carillion’s mismanagement emphasise the importance of taking control of your pension

Consider:

  • The company received its first profits warning in July 2017. The CEO Richard Howson resigned from the position but stayed on in an advisory capacity.
  • To stop investors using bonus clawback rules to recoup bonus payments the executive team paid themselves, Carillion tightens the rules surrounding this in 2016. When Howson resigned he paid himself over £122,000 in bonus payments and over £230,000 in pension payments. This was in addition to his £1m salary.
  • He is not the only Carillion executive to receive high bonuses despite senior management poor performance.
  • The black hole in pensions may be filled partially if Howson and other senior managers can be made under the law to pay back some of the payments he is received, but nowhere near the amount needed to ensure everyone gets what they are owed and earned.

 

Pension Protection

It is clear you cannot rely on your company to ensure you are looked after in your retirement and putting your eggs in one basket, i.e. your employer’s pension scheme is a big risk.

With this in mind, my award winning financial planning services can help you mitigate this risk by spreading over different financial products. Do not become a victim of a Carillion type mismanagement that could leave you stranded in your retirement.

Let’s have a conversation. You can do this by completing the Schedule a Call back form on my site. Let’s protect you from corporate mismanagement.

Source:
Daily Mail – Bonuses
Daily Mail – Pension Black Hole

 

For more information, please contact Michele Carby at Holborn Asset Management on +971 50 618 6463 and on e-mail at


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