Editorial: The Carillion debacle is still unfolding and could yet reverberate across the professional services industry, while concerns mount over other outsourcing giants.
One of them is Capita, a familiar name in the pensions industry. Among the myriad services the company provides is pensions administration, including for Teachers’ Pensions, GPs, many Local Government Pension Scheme funds and, since September, Royal Mail.
The British Coal scheme also recently appointed Capita for pensions admin. Our article shows that concerned members and a keenly observing union have questioned the decision. The scheme responded saying the transition went smoothly.
The admin market is undergoing some change, with Aon pulling out of admin-only contracts. Recently, BT cancelled its admin contract with Accenture early. If Capita starts to wobble, the market could see a complete shake-up.
While further developments in the outsourcing industry are likely, the automotive sector is also in transition and dealing with large scheme deficits.
Bentley’s latest valuation showed a £500m funding hole for a £700m scheme, leading the company to start consulting on pension changes later this month.
Meanwhile Nissan is looking at moving to a career average arrangement, citing the higher volatility of liabilities inherent in final salary schemes.
Union Unite national officer Tony Murphy blamed German carmakers for the trend towards reduced pension provision in the industry. He said employers should keep in mind that German state pensions are much more generous than in the UK, where occupational pensions are crucial.
It is obviously not just car manufacturers that want to shift the burden. But employers’ desire to reduce benefits inevitably means members increasingly contest such changes.
Little wonder that this was the case when the judges’ scheme was changed. Judges had challenged the government on transitional arrangements on the grounds of discrimination; an appeal by the government was dismissed by the Employment Appeal Tribunal. We could well see more of this in the future.
Sandra Wolf is editor at Pensions Expert. You can follow her on Twitter @SandraCWKand the team @pensions_expert.
