THE collapse of the construction company Carillion has again thrown a spotlight on the systematic theft and looting of billions of pounds from workers’ pensions by the bosses.
Two weeks ago, Carillion was forced into compulsory liquidation with debts of over £1.3 billion and a pension deficit of nearly £1 billion, some pension experts estimate it could be as high as £2.6 billion. According to Labour MP Frank Field, chairman of the Work and Pensions Committee, ‘It is clear that Carillion has been trying to wriggle out of its obligations to pensioners for the last 10 years.’
Carillion didn’t so much ‘wriggle out’ of its obligations as steal the money from the pockets of its workers. Last year the company refused to make any of its employer’s contributions to the pension fund claiming that it was ‘deferring’ this payment until 2019 in order to shore up the company’s finances.
This did not, however, prevent it from paying out millions in dividends to shareholders or paying Carillion bosses multi-million pound bonuses. Between 2011 and 2016, Carillion paid out £458.3 million to shareholders alone and the ex-chief executive pocketed a pay packet of £1.5 million in 2016.
In a letter to the MPs’ committee, the chairman of trustees of Carillion’s pension scheme alleged that they were ‘kept in the dark’ about the state of the company’s finances and that the dividends and bonuses were paid out at the expense of pension fund contributions.
This letter explains that for years before stopping all its contributions, the company had cited ‘constraints in cash flow’ as the reason it could not make higher contributions to the pension fund to make up the rapidly developing financial black hole in the fund.
To be absolutely clear, this money that was withheld and the pension fund that was looted to prop up a bankrupt company and provide shareholders and bosses with billions – belongs to the workers. It is made up by the contributions deducted from their pay while the employer’s contributions are nothing more than ‘deferred pay’.
Every single employer setting wage levels deducts from any increase the cost of providing the employer’s contribution to the pension fund. In taking money from the fund or refusing to make the contributions that they have agreed to make in return for lower pay increases, the employers are stealing workers’ money.
Carillion is not the first company to treat its workers pension fund as a personal bank for shareholders and bosses. When BHS collapsed in 2016 with debts of £1.3 billion and a deficit in its pension fund of £571 million, it emerged that its previous owner Sir Philip Green had pocketed £400 million.
Indeed, with British capitalism on its knees and these companies collapsing under the weight of huge debts, the looting of pension funds is now accepted business practice for the bosses and the hedge fund investors.
They will get their millions out of the very lives of the workers; destroy their futures by condemning them to a retirement on pensions that have been cut to the bone. While the bosses are gaily ripping off pension funds the TUC leaders are doing absolutely nothing. In February, the TUC is calling a Pensions Conference, a meaningless debate designed to obscure the fact that it hasn’t lifted a finger to fight the onslaught on pension funds.
Instead, the TUC’s reaction to the latest Carillion pension’s crisis is to call for the Tory government to face up to its ‘moral obligation’ to workers and for more oversight of pension schemes. While the TUC leadership is running away from doing anything to protect pensions, the working class is rapidly learning the lesson from Carillion, BHS and all the other companies that have collapsed after looting these funds.
It is learning that Capitalism today is so bankrupt that it cannot provide any future for workers and their families. The only way forward is to force these TUC leaders to either fight or be removed and replaced with a leadership that will call a general strike to kick out the Tories and bring in a workers government that will nationalise all industry and the banks and place them under workers management in a planned socialist economy.