A £1.5 billion pension scheme is a ‘ticking timebomb’ of debts and liabilities for the plumbing profession, an MP has said.
SNP MP for Perth and North Perthshire Pete Wishart said small employers in the plumbing industry, many just two man bands, could be liable for crippling pension scheme debts when workers come to retire.
Plumbing Pensions (UK) Ltd was established in 1975 to provide pensions for the UK plumbing and heating industry. The scheme as over 36,000 members and assets in excess of £1.5 billion.
According to Wishart, under section 75 of the Pensions Act 1995, employers can become liable for what is known as a section 75 employer debt if they wish to retire or to wind up their business.
The debt is calculated on a so-called ‘buy-out’ basis. This tests whether the scheme has enough assets to secure all the members benefits by buying annuity contracts.
Wishart said this employer debt has mean some individuals running small plumbing outfits now face the prospect of losing their homes and life savings.
He said: ‘Many plumbers have been unaware of this ticking time-bomb, busy getting on with their work of fixing our heating or ensuring our washing machines work and it is vital that we look at all the options to resolve this matter.
'So many plumbers are being caught up in the unintended consequences of the measures…which means that many plumbers wishing to wind up their business has to accept the employer’s share of the shortfall in the scheme on a buy-out basis based on the hypothetical situation that the whole pension scheme is wound up and had to buy annuities for all its members.'
He said he was pleased the government had committed to look at the issue.