Calls for next government to revive multi-employer schemes bill

In an open letter published in The Herald on Wednesday, Mr Menzies has called all political parties to commit to taking action on behalf of him and the other affected businesses.

Since the closure of the scheme for the plumbing industry on June 30, the Plumbing Pension Scheme has continued to recover millions in orphan liabilities, to the consternation of small family businesses and Work and Pensions select committee chairman Frank Field.

The plan is one of the few multi-employer pension schemes in the UK and, according to current legislation, liabilities from one sponsor become the responsibility of other companies in the pension fund when one of these leaves the scheme.

When a company leaves the scheme, this creates a section 75 debt for that employer. If this is not paid at that time, it will become an orphan liability to other scheme sponsors.

According to the last actuarial valuation, in 2017, the pension fund has orphan liabilities of around £400m.

Mr Menzies said: “The unintended consequences of this legislation, and failures by the trustees of the Plumbing Pension Scheme, have left my wife Jenny and I facing imminent financial ruin with a £1.2m section 75 bill.

“I am but one of hundreds of plumbing employers across the UK who are facing ruin unless changes are enacted as soon as parliament reconvenes.”

Mr Menzies is asking for the next government to bring back a bill that was tabled by Scottish National party MP Alan Brown in 2018, which did not make it past the first-reading stage.

At the time, the MP for Kilmarnock and Loudoun proposed to remove the obligation on sponsors in multi-employer schemes to fund their share of any orphan liabilities, which should be guaranteed by the Pension Protection Fund in a last resort situation.

Mr Brown’s bill also proposed that section 75 debt is set on a technical provisions level, which is a much lower bar than the current requirement.