A pension provider has submitted a petition to the Court of Session to explore the viability of continuing to issue enormous payment notices to recover orphan debt in the plumbing industry.
Tradesmen throughout Britain have been hit with bills by Plumbing Pensions UK Ltd as it looks to recover orphan debt to pay plumbers whose employers had been in the pension plan when they ceased trading.
Legislation passed in 1995 means when an firm leaves a multi-employer pension scheme, that employer must pay an exit charge. Dues from firms in the scheme which cease trading are known as Section 75 employer debt.
Plumbing Pensions UK have billed other subscribers to recover this debt, using an algorithm to calculate how much each subscriber to the scheme has to pay.
Small companies have been give six and seven-figure bills, leaving businesses un-sellable and some owners personally liable.
Perthshire-based Plumbing Employers Action Group (PEAG) has been fighting against the system.
The campaign team was set up by plumber Fraser Lawrence, who paid t £7,000 to ensure he was not at risk of losing his home or possessions but the debt lumped on his firm has rendered the business worthless.
Because of the nature of the scheme, pension bosses say the legislation has not been simple to apply and say the staggering bills issued to small firms are “unintended consequences.”
Mr Lawrence has travelled to Westminster to challenge the law and Plumbing Pensions UK has now submitted a petition to Court of Session in Edinburgh to seek directions.
It has no funds of its own so it needs to know whether it can rely on the indemnity clause in the scheme’s rules to cover expenses for section 75 employer debt matters.
PEAG campaigners say the petition highlights a number of failings by Plumbing Pensions UK, but the firm say the law is “complicated”.
CEO Kate Yates said: “Section 75 employer debt legislation is complicated.
“The Trustee is doing the responsible thing by checking whether it can continue to use scheme funds to deal with section 75 employer debt matters.”
A PEAG spokesperson said: “PEAG has read the Trustees petition to the Court of Session in Edinburgh with great interest.
“It confirms a litany of failures by the trustees over the years including not applying the Section 75 law as they should have done in 2005, failing to advise employers about the issue until 2016 and providing wholly incorrect advice to employers when they asked questions.
“PEAG are taking legal advice about the petition.”
