精东影视

The Construction Confederation has gone bust, leaving a 拢20m deficit in its pension fund and hundreds of people who stand to lose up to 70% of their retirement income. The situation is extremely depressing for those affected, but it鈥檚 not a scandal. It鈥檚 not a tale of incompetence or deceit. It鈥檚 just the way things are now: many businesses are staring into unfeasibly large pension black holes 鈥� the Royal Mail is 拢3.4bn short, and BA has to find 拢3bn. More and more, deficits are emerging as the deciding factor in whether businesses thrive, merge or wither.

It鈥檚 well known how we got ourselves into this mess: we鈥檝e started living 10 years longer, the stock market has not performed well and we have a tax regime and financial regulations that have made it nigh-on impossible for funds to operate at a surplus when times are good. Indeed, many firms took payment holidays, which later proved disastrous. Not surprisingly, companies have responded to their deficits by rushing to close defined benefit schemes (which attached fixed obligations to them) and replace them with the money purchase model, which places the risk on the employee.

The CC simply followed this well-trodden path. By the end, it was spending half its membership fees on its pension fund. This was not exactly ideal, but was bearable if the large contractors helped to carry it. Obviously, that was a big if: as soon as the big spenders left to form the UK Contractors Group, the confederation鈥檚 spine snapped like a twig.

The pension fund鈥檚 trustees have spent the last year trying to find a way to meet their obligations, and as a result they have brought in the lawyers. This has attracted criticism from some, who argue that it鈥檚 just throwing good money after bad, but the trustees have little choice. Unlike members of most UK funds, the 500 people belonging to the CC scheme don鈥檛 have the backstop of the Pension Protection Fund (PPF), which was set up to help the pensioners of companies that have become insolvent. Unfortunately, however, the CC is not a company; its legal status is more like a members鈥� club, so it鈥檚 not clear where it stands. The trustees are hoping a court will rule that it is eligible for help from the PPF 鈥� although this might be a long shot, particularly as it hasn鈥檛 been paying the fund鈥檚 levy. Even if it is successful, future pensioners will be limited to 90% of what they would have got, up to a limit of 拢30,000, and they will not get any annual increases. The position of workers employed by the Home Builders Federation (HBF) is even worse; the HBF used have its pensions handled by the CC but left, which meant its 拢3.6m deficit is classed as a separate account, and because the HBF is not insolvent, its members can have no hope whatever of a PPF bailout.

The outlook for the 500 or so people affected is not looking good. The former member bodies of the CC have little cash, so the lawyers will have to pursue their members, or their members鈥� members 鈥� but again we鈥檙e on virgin legal ground. Even if the law is grey, the moral dimension is surely a little more black and white. Many of those affected were at the CC for most of their working life and quite reasonably trusted their employers to look after them: after all, the CC had been around for more than a century so ought to be reliable enough.

We know times are tough all round, and if some companies or trade bodies are compelled to make a contribution, that may mean that some people are made redundant. But can those firms that have enjoyed the support of tax expert Liz Bridge and her colleagues over many years simply turn their back and pretend it鈥檚 someone else鈥檚 problem?

Denise Chevin, editor