The Plumbing & Mechanical Services (UK) Industry Pension Scheme is to carry out an independent review of its governance structures, after sustained criticism from the scheme's small employers and a court case over its handling of orphan liabilities.
The scheme's trustee and constituent organisations announced that Pi Consulting had been appointed to lead the review, which will aim to improve representation for employers and "examine the structure and function of the trustee board".
In August, Pensions Expert revealed that the scheme has been contacted by the Pensions Regulator over its failure to protect employers from a rising bill for orphan liabilities – unpaid debts left behind by an exiting employer. Belated attempts to recover Section 75 payments have been widely reported to be pushing smaller employers into bankruptcy.
The current governance structure has served the scheme well in the past, but we believe the time is right to review what the scheme needs for the future
Kate Yates, Plumbing Pensions UK
A March petition to use scheme assets to fund an upcoming legal battle acknowledged several errors in advice given to employers. Separately, the Plumbing Employers Action Group, which has long been critical of the scheme's trustee board, has applied pressure on the scheme to carry out an independent governance review, promised six months ago.
Review to consult all parties
The scheme has now acquiesced to this request, with Pi asked to review scheme documentation and interview members and employers before a final working group meeting to decide on next steps.
Kate Yates, chief executive of Plumbing Pensions UK, said: “I am looking forward to working with Pi Consulting on this project. The current governance structure has served the scheme well in the past, but we believe the time is right to review what the scheme needs for the future. This will ensure it continues to serve employers and members in the most effective and efficient ways possible.
"Building stronger communications processes and having in place an effective forum for employers to engage with the scheme is essential for its successful operation in the future. It is also a good opportunity to review how the trustee board operates now that the scheme has closed to future benefit accrual.”
Alan Pickering, chair of the trustee board, said: “Plumbing Pensions' mission is to provide cost-effective, efficient and secure pensions, today and into the future, for the plumbing and mechanical services industry. I am pleased the trustee and constituent organisations have agreed to move forward with a governance review to future-proof the scheme and enable us to enhance and improve our processes and ways of working.”
Criticisms abound
The plumbing scheme has found itself the subject of parliamentarians' ire in recent months.
Former pensions minister Ros Altmann recently said: “It is crystal clear that this trustee board fails the tests of modern governance. It has conflicts of interest writ large.”
Baroness Altmann noted in August that the March Scottish court papers “identify disastrous failings on the part of the trustees”. At the time, Ms Yates responded that the scheme was fully aware of the impact Section 75 debt legislation has on employers, and had held off collecting payments while it lobbied the government to change the law, before eventually being forced to chase the debts.
TPR in discussions with Plumbing trustees over governance failures
The Pensions Regulator has been in discussions with the trustees of the Plumbing and Mechanical Services Industry Pension Scheme, who face criticism for governance failures amid a long-running debacle that could send plumbers into bankruptcy.
Scottish Labour and Co-operative Party MSP David Stewart has campaigned on the subject of Section 75 injustices too: “I have written to [pensions minister Guy Opperman] a multitude of times since the start of the year, when I travelled to Whitehall for talks I scheduled with him and his DWP policy leaders.”
Mr Stewart gave the example of his constituent Murray Menzies, who has a “so-called debt of £1.2m” that is “wreaking havoc” on his wellbeing.
“It had frozen all his hopes for the future, put paid to any chance he ever had of a retirement. I told them he is going through what could only be described as a living hell,” Mr Stewart stressed.
