Plumbing pensions trustees are "failing in their duty" to provide participating employers with the information they need to prepare for onerous section 75 debts, the Plumbing Employers Action Group (PEAG) says.
The action group said, despite the s75 rules coming into force in 2004, no employers within the scheme have been provided with accurate calculations of the debt they will be asked to pay. These include ‘orphan' liabilities - pension promises left behind by previous employers that have previously gone bust.
Trustees of the Plumbing and Mechanical Services (UK) Industry Pension Scheme are expected to begin issuing s75 notices over the next few months, triggering the debts and potentially causing bankruptcy for some businesses. Many employers in the scheme are also sole traders and will face personal liability for the debts.
The Plumbing Employers Action Group (PEAG) has now criticised the trustees for their failure to act over 15 years since the Pensions Act 2004 was introduced.
Speaking to PP, PEAG spokesperson Garry Forster said: "None of the employers have any idea what their debt is until the notices arrive. They then have six weeks to challenge it, and then six weeks to pay it.
"The trustees are not engaging with PEAG. They have a duty to ensure employers don't have a debt imposed on them which is not down to them to pay. They need to be more creative in looking at the situation, to find a satisfactory answer and one that is fairer."
While the government has introduced mechanisms to aid employers in this situation, Forster said they do not go far enough and neglect to mitigate the impact in any way.
"The deferred debt arrangement and flexible apportionment arrangements do provide a type of remedy, but they simply push the problem down the road," he continued. "A number of businesses are owned by people who have or are looking to retire, they don't know what they owe and there is a great fear that they will end up losing everything."
He said the trustees had spent years saying the exercise was too difficult.
"The trustees have failed in their duties. How can they sit there for over 10 years and say ‘it is too difficult for us to apply s75' when they have some of the finest lawyers and actuaries in the land advising them?"
Plumbing Pensions UK chief executive Kate Yates said the scheme understood the concerns but noted the s75 legislation was "extremely complex".
She said: "Employer debt legislation exists to protect member benefits and other participating employers in a multi-employer pension scheme because it allows the trustee board to collect money from employers when they leave and end their financial support to the scheme.
"The trustee has done all that it reasonably can to petition for change to make the legislation fairer since it changed in 2005. During this period the trustee has had extensive discussions with its professional advisors, The Pensions Regulator and the Department for Work and Pensions."
The trustees had "always hoped" for a change in the law or a "special exemption" for the scheme, she continued, but the government's defined benefit white paper, published last year, dampened hopes, leaving "no option" to proceed with calling on debts.
Yates concluded: "We are working hard to ensure employers have all the information and guidance they need to support them through this process."
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