Green was commenting in the wake of news that the Carillion scheme blackhole is as high as £2.6bn – higher than the official £587m.
The higher figure has been reported by Sky News based on written court statement from a Carillion executive.
“Carillion is not the first and it certainly will not be the last major company to collapse, leaving the Pension Protection Fund (PPF), the government’s pension lifeboat, to rescue pension members and ensuring that they receive the majority of their hard-earned retirement income,” the prominent international IFA chief said.
“Too many major companies for far too long have been focusing on short-term goals and profits, rather than taking a longer-term, sustainable and more holistic approach. This is, in part, causing the black hole in the so-called ‘gold-plated’ defined benefit pension funds.
“The combined deficit of the FTSE 350 firms has now reached 70 per cent of their profits. But it is not all down to firms. External factors have played an important role in the expansion of the funding gap.
“These include that ultra-low interest rates, under the quantitative easing agenda, have pushed up the current value of future liabilities, but even the rally equity and bond markets couldn’t offset them. In addition, baby boomers, who are those most likely to have these so-called ‘gold-plated’ pensions, are into their ‘golden years’, ushering ever more schemes into the costly pay-out phase.”
Green praised the PPF’s work in providing reassurance but argued that the days of final salary schemes keeping their promises had passed and urged government to help manage liabilities.