The Pensions Regulator (TPR) has confirmed that while Carillion Group’s insolvency had a “significant impact” on its pension schemes and the benefits savers will receive, TPR is unable to use its powers in these specific circumstances.

TPR made the comments following an “extensive investigation exploring all the avenues available to [the regulator] to take action”, including consideration of the material shared by the other investigating agencies.

This investigation primarily focused on whether any activities in respect of the insolvency, and the events and circumstances leading up to it, could provide grounds for TPR to take enforcement action, particularly its anti-avoidance powers.

TPR initially announced plans for the investigation in 2018 shortly after news of the Carillion Group's insolvency in January 2018, suggesting that it could issue a contribution notice in relation to the case.

However, TPR concluded that there was "no prospect" of securing a contribution notice based on the evidence of Carillion PLC’s public misstatement of its financial performance.

It stated: "We did not find any evidence that this, or any of the group disposals, caused material detriment to the likelihood of any of the scheme’s members receiving benefits, or were undertaken with the main purpose of avoiding the debts owed to any of the schemes.

"We also concluded that there was no scope to issue a Financial Support Direction as, given the insolvency of the whole Carillion Group, there would be no targets capable of providing financial support to the schemes.

"Finally, we considered whether there was any scope to use our criminal power relating to the provision of false and/ or misleading information. However, we concluded that the offence was not made out on the facts of this case."

As well as considering whether the use of its powers would be appropriate, TPR undertook an assessment of contagion risk and the likely impact this would have on their pension provision, which also found that there were not systemic risks to other defined benefit (DB) schemes as a result of Carillion’s collapse.

“However," TPR stated, "we are supportive of the action taken by the other agencies against the parties involved where alleged failings have been identified and will assist in any action that improves the position of the pension savers and the Pension Protection Fund (PPF)".

TPR also highlighted the response from broader supervisory bodies, noting that investigations into the actions of those involved were also opened by The Insolvency Service (INSS), the Financial Conduct Authority (FCA) and the Financial Reporting Council.

Indeed, whilst TPR was unable to use its powers, the FCA and the INSS concluded from their investigations that there were grounds to pursue their respective powers based on their respective investigations’ findings of governance and reporting failings.

In addition to this, TPR noted that the Official Receiver, acting as the liquidator of the Carillion Group, issued high court proceedings against KPMG in January 2022, claiming damages of £1.3bn for alleged negligent audits of Carillion PLC’s financial statements.

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