£20m pension black hole at Construction Confederation

Former senior officers of the Construction Confederation, including industry luminaries Malcolm McAlpine and James Wates, could be pursued to fill a £20.5m hole that has emerged in the defunct trade body’s pension fund.

The trustees of the CC’s pension scheme last week sent a letter to more than 500 staff members past and present. It said the deficit, which amounts to almost exactly half the total fund needed, would result in severe reductions to members’ pensions. It added that the trustees would pursue former member organisations for the cash.

Despite having had 500 employees and a final salary pension fund, the CC was an unincorporated body. This means it had no separate legal existence from its member bodies, which included the National Federation of Builders, the Civil Engineering Contractors Association and the Scottish Building Federation.

The trustees said their lawyers had considered the CC’s constitution and had concluded that “member organisations, past and present, are liable for the pension deficit”.

Elmer Doonan, partner at law firm Denton Wilde Sapte, who is advising the trustees, said: “If this fails, we would have to consider all options.”

This could include making claims against former CC officers, if it is found they failed to carry out their duties to secure the organisation’s debts.

This could implicate anyone who sat on the CC council, including James Wates, the deputy chairman of Wates Group, who is a past chairman, and Stephen Ratcliffe, the current chief executive of the UK Contractors Group. It could also include 90-year-old Malcolm McAlpine, the grandson of Sir Robert and a former treasurer of the CC.

The trustees said they had made a court application, to be heard in November, for the CC to be classed as a company so that it could be placed into liquidation and the trustees could apply to be covered by the government’s Pension Protection Fund.

The trustees’ letter explains that they had not acted until now because “CC intimated on a number of occasions that it intended to pay something to the scheme”. It adds: “It has now transpired that it is not going to do so. In fact, CC is insolvent.”

The pension deficit will affect all members, but those who have taken early retirement or are not yet retired could lose up to 70% of their entitlement.

Ann Hearn, a trustee, said: “Some of these people have worked for a long time; now they could find their savings have gone.”

John Southworth, deputy chief executive of the CC, declined to comment.