Carillion in dire financial trouble.

[Sidney1st]

Just listening to 5 live this morning.

Carillion built the new stand at Anfield on time and within budget.
Carillion Hospital work/construction in Liverpool is over a year late and not within budget.

[ClaretDiver]

Rumour has it that the big bosses ringfenced their huge bonuses only a couple of months ago....if true it need investigating!

[Walton]

To put this in perspective these are figures of a member who joined a scheme on 01/03/1991 and left 04/09/1992 (only 1 and half year membership), Pension upon leaving £1,363 (member contributions £751), through statutory revaluation this has risen to £5448 now, the member is still a few years off the scheme retirement age so it still has to be revalued annually. When the member decides to retire the scheme has to increase the payments annually. Now the member has been offered a transfer value of £192,638 (Not bad for a contribution of £751).

Those figures don't really stack up.

Assuming a 60ths scheme, they will have been on a basic salary of £54,250 back in 1992. Nice work if you can get it, bearing in mind the Prime Minister got paid £53,007 a year in 1992.

The member contributions of £751 would be less than 1% of pay. Again, that's not likely.

As for the transfer value of £192k, that is 35 times the current revalued deferred pension. That's about normal in these times of low gilt yields, I don't have an issue with that.

[Quickenthetempo]

Lots of allegations getting thrown about on Twitter.

A lot of politicians will be looking over their shoulders.

[Dy1geo]

Those figures don't really stack up.

Assuming a 60ths scheme, they will have been on a basic salary of £54,250 back in 1992. Nice work if you can get it, bearing in mind the Prime Minister got paid £53,007 a year in 1992.

The member contributions of £751 would be less than 1% of pay. Again, that's not likely.

As for the transfer value of £192k, that is 35 times the current revalued deferred pension. That's about normal in these times of low gilt yields, I don't have an issue with that.

There is a large GMP element of £757 at DOL with a 7.5% fixed revaluation rate. As for contributions being low my guess is contribution holiday ( I built up a nice pension working for a company in the 90’s without paying a penny).

I just wanted to show the reality and the liabilities schemes have

[Paul Waine]

Lots of allegations getting thrown about on Twitter.

A lot of politicians will be looking over their shoulders.

Lots of confusion by many commentators.

Profit warning doesn't necessarily mean a company is going bust - only that the company's management expectation of earnings is lower than the market (for their shares) expects. Obviously, a second profit warning and then a third mean the problems were proving very difficult to fix - and in Carillion's case haven't got fixed.

Hedge funds "shorting" the shares is a "bet" that the shares will fall in price - fits neatly with the profit warnings - and shows that the hedge funds got this right.

So, should the government have awarded new contracts following the profit warnings? If Carillion was the lowest bidder for the contract - and, if client can manage the change to a new contractor, if required - it is good for the taxpayer that the Government awarded the contracts to Carillion - it saves the taxpayers' money - and it gives Carillion a chance to get out of their difficulties - always assuming that they didn't bid for new contracts that would just put them into a bigger hole.

We will see how well the process is managed in transferring the government contracts to new contractors. I'd expect these new contract prices to be higher than Carillion's existing price - so, taxpayer will be paying more in future. I expect the media will be full or reports on what might go wrong with some of the contracts that are more difficult to transfer.

[Sidney1st]

Some interesting chats on 5live from former employees of Carillion.

Usual comments of they could see this coming due to poor working practices etc.
Would also appear Carillion were very difficult to do work for and get paid by which backs up what someone said on here yesterday about how they operated.

[Walton]

There is a large GMP element of £757 at DOL with a 7.5% fixed revaluation rate. As for contributions being low my guess is contribution holiday ( I built up a nice pension working for a company in the 90’s without paying a penny).

I just wanted to show the reality and the liabilities schemes have

I have no issue with the revaluation, but I doubt they got a pension of £1363 after 1.5 years service, unless they were on more than the PM.

[Paul Waine]

There is a large GMP element of £757 at DOL with a 7.5% fixed revaluation rate. As for contributions being low my guess is contribution holiday ( I built up a nice pension working for a company in the 90’s without paying a penny).

I just wanted to show the reality and the liabilities schemes have

Hi Dy1geo, sounds like you have enjoyed some good fortune with your pensions.

I'm with Walton and believe the 18 months employment you quote must have been a well paid position, and/or there was a major redundancy exercise and the employee's pension was significantly enhanced.

Re contribution holidays - the holidays allowed employers to stop putting in contributions because, at that time, the assessment was that the pension fund was overfunded. There were some government tax rules that required companies take holidays - i.e. stop putting money into pension schemes if they had more than (I believe) 105% of the assessed liabilities. The government did this because pension contributions reduced the corporation tax a company paid to the government.

Of course, there were/are schemes where the employee was not required to make a contribution - but this would be the rules for that scheme, and not a temporary "contribution holiday."

[Dy1geo]

I have no issue with the revaluation, but I doubt they got a pension of £1363 after 1.5 years service, unless they were on more than the PM.

Yes the member was in a senior management role.

As I have said I was only trying to point out the reality the trustees of schemes are now facing, the example I provided is just one of many.

[UpTheBeehole]

The decision to award them such big HS2 contracts after they'd got themselves into a big mess was very strange.

Personally however I'd like any firm which blacklists union members to go under though. Shocking practice.

[Walton]

Yes the member was in a senior management role.

As I have said I was only trying to point out the reality the trustees of schemes are now facing, the example I provided is just one of many.

The only thing to blame is low gilt yields then.

https://www.standard.co.uk/business/bre ... 81631.html

[Dy1geo]

[quote="Paul Waine"]Hi Dy1geo, sounds like you have enjoyed some good fortune with your pensions.

I'm with Walton and believe the 18 months employment you quote must have been a well paid position, and/or there was a major redundancy exercise and the employee's pension was significantly enhanced.

Re contribution holidays - the holidays allowed employers to stop putting in contributions because, at that time, the assessment was that the pension fund was overfunded. There were some government tax rules that required companies take holidays - i.e. stop putting money into pension schemes if they had more than (I believe) 105% of the assessed liabilities. The government did this because pension contributions reduced the corporation tax a company paid to the government.

Of course, there were/are schemes where the employee was not required to make a contribution - but this would be the rules for that scheme, and not a temporary "contribution holiday."[/quote

The scheme I was in was in surplus and fortunately still is although on a full wind up it is just short.

The rules on schemes are as you state and if some were in really high surplus schemes could request refund of contributions.

As for the member I quoted I can only go off the TVAS supplied and the figures quoted.

I have never requested a TVAS for my own plan as I want the guaranteed income but if I did would it show as a member contribution of £0, just asking.

[CrosspoolClarets]

I have big concerns with how the government (presumably after being lobbied by or funded by) awards contracts to huge firms, in some cases regardless of working practices. It’s all very protectionist by stealth and nothing to do with free markets. The EU is even worse.

My own one man band now isn’t even allowed to tender at all. It’s all big firms who sit on framework agreements that are allowed to tender for most jobs. I long for the good old days where it was little old me versus Deloitte or KPMG to win a fairly small piece of work. I liked to think it kept the big boys on their toes. Now, I have to try to get subcontracts in most cases in the UK. That’s why I work overseas a lot. It’s very hard for the little person. I’m sure it’s the same in Carillion’s sector, where the trend is now to have a lead contractor. Great if they are fantastic, but what if they are not?

Instinctively, I don’t feel the Tories are the answer when it comes to these kind of issues. Nor do I think Labour are the answer. Only when we have genuine free trade with the UK people properly looked after will this question be answered.

[Paul Waine]

The decision to award them such big HS2 contracts after they'd got themselves into a big mess was very strange.

Personally however I'd like any firm which blacklists union members to go under though. Shocking practice.

The Times reports that Carillion was one of three groups that formed a joint venture to win the HS2 contract, so the two other parties will "step in" and cover Carillion's role. Should be no loss to the government/taxpayer on the HS2 from this situation.

it won't stop the media/commentators questioning the decision.

[Paul Waine]

[I have never requested a TVAS for my own plan as I want the guaranteed income but if I did would it show as a member contribution of £0, just asking.[/quote]

Hi Dy1geo, I've never seen a TVAS - but I'd expect it to quote only the pension rights that have been built up plus the date the pension would start to pay out and the lump sum offered to buy out these pension rights and transfer into a defined contribution/personal pension fund.

How much the employer put into the scheme and how much the employee contributed are not that important in the TVAS - and, quoting "you paid in £X - and can now take out £XXXXXX" may be considered very misleading. It may even run the risk of falling foul of "mis-selling" regs.

Having said that, there does seem to be some poor advice being commented on re British Steel/Tata pension scheme transfer....

[Quickenthetempo]

A little article about the connection with the Tories for those that dismissed it.
https://politicalscrapbook.net/2018/01/ ... more-69533" onclick="window.open(this.href);return false;

[If it be your will]

.

[Quickenthetempo]

Just listening to 5 live this morning.

Carillion built the new stand at Anfield on time and within budget.
Carillion Hospital work/construction in Liverpool is over a year late and not within budget.

This will be down to the contract signed for delivering the project on time.

For instance the Golden Square shopping centre that BovisLL built had a £25k per day fine for every day the project went over.

Liverpool would of lost out on millions the longer the stand stayed shut so would of been huge fines imposed to the contractor. Hospitals won't have the same losses.

[Sidney1st]

They did mention the fines on the Radio and I believe they were losing money on the hospital job in fines.

[Quickenthetempo]

When you're a trade management only contractor you have to be prepared to pay extra money to the Sub-contractors when things go wrong on site (which they always do). Fighting over who's fault and who's going to pay for the changes is very time consuming and ultimately very costly.

Which is the most likely reason for hold ups so long.

[Paul Waine]

A little article about the connection with the Tories for those that dismissed it.
https://politicalscrapbook.net/2018/01/ ... more-69533" onclick="window.open(this.href);return false;

Just to add the bits that "scrap book" didn't mention:

Appointed to Carillion Board in June 2011, Green became Chairman in May 2014. Philip Green is also Chairman of both the Nominations and Business Integrity Committees.
Philip Green was Chief Executive of United Utilities Group plc from 2006 to 2011. His earlier business experience includes serving as Chief Executive of Royal P&O Nedlloyd, as a Director and Chief Operating Officer at Reuters Group PLC and as Chief Operating Officer at DHL for Europe and Africa.
He is Non-Executive Chairman of Logicor, a European logistics real estate business owned by Blackstone and of Corsair Infrastructure Management which is based in New York. (from Carillion's own web site - hope they've not left anything important out).

[Quickenthetempo]

A company called BlackRock have apparently made a fortune from bets about Carillion going bust.

George Osbourne is a £650k a year adviser to this company.

[ClaretDiver]

A lot more to come out yet I feel!

[Quickenthetempo]

I spoke to a mate last night who works on Carillion sites. He said his company had demanded payment every two weeks for the last 6 months instead of the 120 day they use. Crane companies wouldn't work for them unless cash up front.

This could mean limited damage to these companies which is good news but it looks like it was on the cards for a while them going bump.

[1fatclaret]

I spoke to a mate last night who works on Carillion sites. He said his company had demanded payment every two weeks for the last 6 months instead of the 120 day they use. Crane companies wouldn't work for them unless cash up front.

This could mean limited damage to these companies which is good news but it looks like it was on the cards for a while them going bump.

I hope your mate’s firm isn’t one of those nasty subcontractors who are being blamed for the poor, hard done to, picked on contractors demise. Un-fecking-believable.


https://www.constructionnews.co.uk/1002 ... cifQ%3D%3D" onclick="window.open(this.href);return false;