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29 January 2018, 09:35
Young people are shunning pensions - and the Carillion collapse shows why. Business expert Gemma Godfrey explains why.
This story is all about the duty of care that a company owes to its employees as well as its shareholders and its top earners.
The issue is that not only did it run up significant debts, but it did so at a time when it continued to pay out dividends to shareholders. So the concern now is will it be able to pay its pensioners?
They're saying that there's about £900million of debts that they've run up at a time when they continued to pay out more cash.
They were paying £217million more in dividends to shareholders than they were actually generating in cash between 2012 and 2016.
It's making people very concerned about pensions. Saving for retirement is absolutely essential because as soon as you stop earning, you need to make sure you've got enough savings to be able to fund your lifestyle.
But this is the reason why younger generations are much more interested in savings in lieu of a pension. It's why the Chancellor came out with this idea of aLISA, helping people get onto the property ladder as opposed to quite understandably now waiting too long to get money that now they're concerned they may not.
And there was this review by the Pension Protection Fund that said that out of the defined benefit schemes that are out there, there are about 2,000 schemes are in surplus, but there are 3,700 that are in deficit. Which means £104billion of deficit.