The Pensions Regulator is considering enforcing its anti-avoidance powers against the Carillion directors, forcing them to pay into the firm’s collapsed pension schemes, it has emerged.

In a letter to the Work and Pensions Committee, sent on 11 June , TPR CEO Lesley Titcomb said that it could issue a contribution notice, which can be used against individuals, who would then be required to pay cash into the scheme or the Pension Protection Fund (PPF).

Carillion collapsed on the 15 January 2018 and shortly afterwards TPR opened an investigation into the firm’s directors for avoiding their obligations to the company’s pension schemes.

Titcomb wrote: “We launched an investigation to determine if there is reason for us to use our anti-avoidance powers. The first stage is for us to review the information arising from the insolvency in order to determine whether there are any aspects which could constitute avoidance and which warrant further investigation.

“We are working alongside a number of other agencies who are conducting their own investigations. At this point we are not able to confirm when our investigations will be concluded.”

Titcomb added that in order to enforce a contribution notice they must prove the directors acted or failed to act to prevent the recovery of the scheme under section 75 of the Pensions Act 1995.

Committee chair Frank Field questioned the timing of the initial investigation, but today welcomed the news that the regulator was looking to enforce anti-avoidance powers on the firm's directors.

Field said: “The Carillion directors continued to line their pockets as the pension entitlements of their workforce evaporated, with the PPF due to shoulder the staggering pension deficit they left behind.

“We urge TPR to take this opportunity to demonstrate the new direction and vigour it keeps professing. Clear, exemplary action, not words, is necessary now to restore any confidence in its ability do its job and protect the pensions of ordinary people.”

Despite this, Field highlights that it is still unknown how much will be recovered by the PPF, with EY suggesting that as little as £12.6m could be given to the lifeboat.

Responding to Titcomb’s letter, Field wrote: “By contrast, our analysis of Carillion’s annual accounts suggests that over the past decade, Carillion’s six main directors pocketed nearly £17 million in total pay.

“Whilst such amounts will not go far in offsetting the largest bill the PPF have ever picked up, estimated at £800 million, it is surely the case that these directors have benefitted disproportionately at the expense of the pension schemes they should have been funding.”

Earlier this month it emerged that Carillion asked the Cabinet Office to help “persuade” the PPF and TPR to accept its £2.6bn pension liabilities, according to a report by the National Audit Office.

The Committee also reported the former finance director Richard Adam believed funding the pension obligations was a “waste of money”, and the pension “contribution holiday” Carillion directors negotiated as they took on yet more borrowing.

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