131. Trustees invest the assets of a pension scheme and are responsible for ensuring it is run properly and that members' benefits are secure.396 In this role, trustees negotiate with the sponsoring employer on behalf of the scheme members. As we noted earlier in this report, a single trustee board (the Trustee) represented the large majority of Carillion's DB scheme members.397
132. Gazelle, who acted as covenant advisors to the Trustee, told us that Carillion may have set out to "manage" the Trustee so that it "did not present an effective negotiating counterparty" to the company.398 This was done in part through the "dominating influence" of Carillion employees, who faced an inherent conflict of interest, on the Trustee board.399 Robin Ellison, the Trustee Chair, disagreed stating that "all the directors of the trust company were independently-minded".400 Gazelle also cited Carillion's budgetary control over the Trustee that "may have limited the ability of the Trustee to itself obtain detailed advice on more complex issues", and pressure exerted on the scheme actuary by Carillion at trustee meetings.401
133. Despite these limitations, and as we considered earlier in this report, the Trustee pushed Carillion hard to secure additional contributions to fund the pension deficits. They also consistently acted on advice from The Pensions Regulator on their approach to dealing with company.402 Both the 2008 and 2011 valuations were agreed well outside the statutory 15-month deadline as the Trustee sought to obtain a better deal. Although agreements were eventually signed by the Trustee and Carillion on these valuations, Robin Ellison argued that they were effectively "imposed".403 As Mr Ellison noted, "the powers of pension fund trustees are limited and we cannot enforce a demand for money".404 TPR does have a power to impose contributions, and the Trustee wrote to TPR requesting "formal intervention" on behalf of scheme members with regard to the 2013 valuation and recovery plan.405
134. The pension trustees were outgunned in negotiations with directors intent on paying as little as possible into the pension schemes. Largely powerless, they took a conciliatory approach with a sponsor who was their only hope of additional money and, for some of them, their own employer. When it was clear that the company was refusing to budge an inch, they turned to the Pensions Regulator to intervene.
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396 The Pensions Regulatory, Guidance for Trustees, accessed 22 April 2018
397 Trustee data shows that at the end of 2013, total membership across the six schemes under the trusteeship of Carillion (DB) Pension Trustee Ltd was 20,587 - Carillion plc's Annual Report and Accounts 2013 show that total membership across all schemes was 28,785 at the end of 2013.
398 Letter from Simon Willes, Gazelle Executive Chairman, to the Chair, 29 March 2018
399 As above. Trustees who are employees of the sponsor are a common feature of Trustee boards.
400 Q151 [Robin Ellison]
401 Letter from Simon Willes, Gazelle Executive Chairman, to the Chair, 29 March 2018
402 Letter from TPR to Robin Ellison and Janet Dawson 27 June 2013; Letter from TPR to the Trustees, 27 July 2011; Letter from the Trustee to the Pensions Regulator, 9 April 2013
403 Q189 [Robin Ellison]
404 Q151 [Robin Ellison]
405 Letter from Robin Ellison to TPR, 9 April 2013