LABOUR MSP David Stewart is urging the UK pensions minister to come to the Highlands to meet plumbers who have been hit with million-pound pension bills.
Mr Stewart has invited MP Guy Opperman to hear first-hand accounts from the bosses of small family firms who have received estimated debt demands from the multi-employer defined benefit scheme, Plumbing Pensions.
The Highlands & Islands MSP, who has secured cross-party support from Moray MP Douglas Ross – Scotland’s new Parliamentary Under-Secretary of State – is calling for changes to be made to the pension scheme’s one-size-fits-all approach, which he said is clearly having unintended consequences for plumbers.
Moray MP Douglas Ross, who is also supporting an affected constituent, said: “It is really good that myself and MSP David Stewart can have a cross-party approach to this because there is further work we can do in Moray and the Highlands to keep this issue at the top of the policy agenda.”
Current legislation means, in certain circumstances, liabilities from one sponsor can become the responsibility of other companies in the pension fund. Other conditions create what is known as Section 75 “debt” for that employer.
And for 71-year-old Inverness plumber Murray Menzies, his estimated Section 75 debt is £1.2 million.
It was triggered when he retired in 2015. Other plumbers across the UK, including a 56-year-old father-of-three in Moray, are also caught up in this “pension nightmare”.
Mr Menzies said he has no way of paying the bill. Selling his home and everything he owns would only cover a fraction of what he has been told he owes to the pension fund despite the fact that he paid all the required contributions.
“It’s hard to believe that after working hard all my life and looking after my employees I may lose everything,” he said.
“The Section 75 regulations were never meant to bankrupt ordinary employers. They were meant to ensure that unscrupulous companies could not close businesses and walk away from any debts in their pension fund. But it has all but ruined our lives.”
Others in the same boat include Elgin plumber Jimmy Wiseman. Like Mr Menzies, he too, for many years, paid all the contributions required into the pension scheme for his employees. He too was stunned to be served with an estimated Section 75 debt for £1.7 million – triggered when he attempted to wind up his business, Wiseman Plumbing & Heating Ltd.
And he too has no means of paying.
His business is a limited company; therefore he is not personally liable for the debt. But the downside is he does not know when, if ever, he can close his business and retire.
He bought his business partner out of the firm four years ago for a four-figure sum. At the time of the transaction neither were aware that this pension debt was going to be served.
Mr Wiseman said: “When I first received the bill I got very down in the dumps and I felt sick about everything. It just totally changed me. I kept thinking ‘how am I going to get out of this’? How is this going to affect the rest of my life and my children’s lives?’ My solicitor didn’t have the specialist knowledge to take this on and I couldn’t afford to pay for expensive legal advice so it’s just that same old story of the small fish being left to fry.”
Mr Wiseman said he has had no contact with the scheme for some time and no official I haven’t demand for money has been served, only the estimated bill.
He added: “So really, all I can do is keep working, because that helps to keep the stress under control.”
Mr Wiseman feels angry about the situation and believes not only should the law be changed to wipe the “debts”, but compensation be awarded to the plumbers who have been issued with the estimated bills.
This sentiment is echoed by a pressure group called the Plumbing Employers Action Group (PEAG).
Set up to raise awareness among UK plumbing companies, and to help those who are affected, PEAG says the £2 billion pensions scheme is fully-funded. The campaign group argues that administration of the scheme has been poor. It claims the trustees failed to apply the law correctly and that they also failed to keep employers properly advised. PEAG is lobbying in alliance with the Scottish & Northern Ireland Plumbing Employers Federation (SNIPEF) for changes to be made to the law.
Last week, PEAG and SNIPEF met with the All-Party Parliamentary Group (APPG) for Plumbers’ Pensions met to discuss their proposals. This discussion is ongoing.
Mr Stewart, who met with Mr and Mrs Menzies this week following his meeting in London last week with MP Douglas Ross and policy leaders at the Department for Work and Pensions, said: “There undoubtedly seems to be widespread consensus that a change in the law is long overdue to protect Mr Menzies from financial ruin and others who are in a similar position.
Mr Stewart said: “Certainly, in my 20 plus years and two case-works in two Parliaments I cannot think of a greater injustice. They’re not just facing financial ruin but homelessness, which is an appalling position.”
The Labour MSP, who has written to the Pensions Regulator and the Pension Protection Fund and has held meetings with PEAG, SNIPEF and the chief executive of Plumbing Pensions scheme Kate Yates, added: “Pensions are a UK Government issue, but I am pursuing a meeting with the Scottish Government which does have some mitigation powers and some representation powers, so at the very least what I will be wanting is a note from the Scottish Government to the pension trustees saying ‘look at this again please, because this is disgraceful’. I can’t say that I can magic it all away, but I can bang on every door and try to get something done.”
Mr Stewart is currently researching what protections there will be, if any, for these individuals if or when the debt notices are legally served.
Mr Menzies said life “has not been the same since we got caught up in the ‘pension nightmare’ last year”.
He said: “Being told that you are expected to find £1.2 million to fund an artificial pension shortfall in a pension scheme that you ceased to pay into when you retired is farcical. But that is the reality of my situation and it not only applies to me but to many other UK plumbing firms who paid into this non-compulsory pension fund for their employees.
“My wife Jennifer and I are hugely affected by the stress that we are constantly under. We await with trepidation the next telephone call, email or letter from the trustees of this pension fund. We have been unable to focus on family events as our lives have been consumed with worry and fear about the future. It is very possible that we may lose our family home and our livelihood. This may come about if we are forced into a situation whereby we have to sell our family home and my shop which facilitates my livelihood. All of our children live abroad. Our eldest daughter lives in Australia, our middle daughter lives in New Zealand and our youngest lives in Spain, so family get- togethers are special to us all. Christmas 2019 should have been a joyous event as two of our daughters were coming home to spend Christmas with us. However, it was difficult to ‘get into the family spirit of Christmas’ with the constant reminder that we have to find £1.2 million if this appalling legislation is not changed.”
Mrs Menzies said the strain was also taking its toll on her.
She said: “This should have been a very special year in our lives as it will be our 50th Wedding Anniversary, my 70th birthday, and our eldest daughter’s 50th, but we are unable to make any travel plans to meet up with our family to celebrate these happy events which we were so looking forward to because of the uncertainty of our future.
“Instead of taking life a bit easier now that he is in his seventies, my husband has been forced back to work in order to pay legal fees. We don’t have any savings to fight this through the courts. We try daily to ‘get on with things’ but it is difficult at times. Well-meaning folk don’t fully understand our plight and we are told quite often that ‘it will be all right, things will work out’. However, the reality is that it may not work out and we will be left destitute and homeless at the age of 71 and 70 respectively, as a result of a situation we are not responsible for.”
The Plumbing Employers Action Group (PEAG) was formed three years ago in response to the notification by the Trustees of their intention to commence collecting Section 75 debts. It has more than 50 members, all of whom are or were employers in the scheme.
The group’s aim has been to see what pressure it can bring to have the Section 75 legislation amended, to provide support and general advice to members and to establish what other remedies may be available to PEAG employers affected or potentially affected by Section 75.
It argues that it cannot have been Parliament’s intention to bankrupt individuals in this way and through no fault of their own. And it accuses the Plumbing Pension Trustees of negligent wrongdoing in failing to apply Section 75 as they should have done since 2005 and claim they failed to even advise employers about the issue until 2016.
Mr Menzies is understood to be among 29 unincorporated employers who cannot take advantage of easements within the Employer Debt Regulations 2005 (source PEAG).
The Pensions Minister Guy Opperman’s officials at the DWP are currently analysing proposals by PEAG and SNIPEF, which both groups believe will remove the threat of bankruptcy from these 29 individuals without having a negative impact on the pension scheme.
Mr Wiseman is not in the same category as those 29 individuals as his business is limited so he is not personally liable for the debt.