Carillion electricity workers could trigger pension protections test

A group of Carillion electricity workers may become a key test case for pension protections.

These employees, some of whom are now retired, were given significant pension protections when the electricity industry was privatised in the 1980s.

Prospect is calling on the Secretary of State to ensure the commitments are honoured.

Around 10,000 electricity workers were given guarantees about their pensions when the industry was privatised. They were part of the Electricity Supply Pension Scheme (ESPS). Similar, but separate, arrangements have also been made for the rail and transport industries.

The guarantees mean that pensions would be at least as good as what they would have been in the public sector. Crucially, they prevent the employer or the scheme from making changes which reduce future pension accruals or increase employee contributions. The protections also require that members are no worse off if the scheme is wound up.

However, Carillion’s collapse now means there are now significant questions about how the guarantees will be upheld for those who worked for the company.

The government’s handling of this situation could set a precedent for how members of similar schemes may be treated in the future.

Prospect general secretary Mike Clancy said: “The statutory pension protections granted at privatisation of the electricity industry were crucial to the success of that endeavour.

“The provision for people working in the industry before it was privatised to be no worse off as a result of a successor scheme, such as the Carillion group of the ESPS, being wound up must now come into effect.

“Tens of thousands of protected persons in the electricity industry and other industries will be watching this situation closely to see that their colleagues in the Carillion group of the ESPS receive their benefits in full.”