The consultation of Plumbing Pensions’ with a departing employer over its exit fees has highlight fundamental problems with the current section 75 debt legislation as it stands for non-associated multi-employer schemes. Plumbing Pensions is an industry-wide defined benefit scheme for the plumbing industry with 415 active contributing companies.

Current legislation does not distinguish between multi-employer schemes in which all employers are part of a group, and between those, such as Plumbing Pensions, where they are unconnected.

Anne-Marie Winton, involved in the consultation, pointed out that few UK multi-employer schemes are comprised of non-associated companies, making this case exceptional.

One of the issues is that no one is responsible for informing employers of pensions law when they join, said Winton, meaning many sign a contract that obliges them to follow pensions law blind.

She noted the matter had been “kicked into the long grass” by the government.

“It would be a scandal if many family businesses were bankrupted,” she said, but added that due to the complexity of calculating the debts, it might take “years before this explodes”.

The case, she said, is troubling. “The iniquity is that the trustees haven’t been collecting debts when they have fallen due in the past,” as they might not have known how to start the process. “Why haven’t they taken advice?”

Read the full article in Pensions Expert here.