Former TPR director served with summons over Section 75 debacle

As Pensions Expert revealed in July, plumbing and heating services company Kamco argued in its summons that Plumbing Pensions — the administrator of the Plumbing & Mechanical Services (UK) Industry Pension Scheme — continued to actively promote the pension fund to prospective employers, despite being aware of mounting problems pertaining to orphan liabilities, and did not inform them that they would incur liability for Section 75 debt should they join the scheme.

During the time that Kamco was a participating employer in the scheme it paid contributions on behalf of its employees totalling £107,455. Then, in April 2019, Plumbing Pensions estimated that it had incurred Section 75 liabilities worth £260,576.

Kamco is asking for a payment by Plumbing Pensions of £260,576, with an interest rate of 8 per cent a year from the date of the citation until that payment has been made. 

It also demands that Plumbing Pensions pays Kamco “any amount for which it is liable under Section 75” by way of damages.

Keith MacBain, managing director of Kamco, told Pensions Expert that the summons had been filed because of the “havoc” caused by Plumbing Pensions’ failure to inform employers about its inability to collect Section 75 debt.

“TPR knew what Plumbing Pensions were doing, and on March 17 2014 told them that they should advise incoming employers about the Section 75 liability. We had, at that time, signed up to start with Plumbing Pensions in April 2014. They should have complied with TPR’s instructions but didn’t,” he said.

Gunnercooke pensions partner Parminder Latimer, who is representing Kamco in the case, has now had Pickering added as a defendant.

Per an update on Gunnercooke’s website, the argument against Pickering is that he was “aware of the way the Plumbing Pensions scheme was administered and that Plumbing Pensions Trustees was wilfully failing to comply with its obligations in relation to the Section 75 employer debt”.

“Pickering knew PPT was actively encouraging new employers, such as Kamco who joined the scheme in early 2014, to join the scheme and thereby the employers would be exposed to the risk of incurring Section 75 liabilities and consequential losses,” the statement continued.

“As a professional trustee and chair of the Plumbing Pensions Trustee Board, he had duties to potential new employers, to take steps to ensure before joining the scheme new employers were made aware that they could be exposed to Section 75 employer debt liabilities. He failed to do so.”

Kamco also contends that Pickering “exasperated [sic] the maladministration of PPT, by allowing the scheme to remain open to new employers in early 2014, so that Kamco became a participating employer of the scheme and became saddled with a Section 75 debt in the region of £265,000”. 

“At the same time, TPR had already issued communications to PPT highlighting that the Section 75 risks should be communicated to potential new employers before they participated in the scheme, no such ‘warning’ was given to Kamco,” it stated.

It argued that, as with PPT in general, had Pickering upheld his duties Kamco would never have joined the scheme, and so would not have been caught up in its Section 75 debt drama.

Latimer said: “While most of the board of PPT were or are lay members, Pickering has been a board member of PPT for over 40 years. He served as a chair for 20 of those 40 years and is a professional trustee. He is a former non-executive director of TPR, he was chair of Bestrustees until recently, becoming its president.

“While not absolving the other board members of their part, they would have looked to Pickering for directions, advice and guidance. He has the knowledge and a duty of care to understand how the scheme was run, and he had the knowledge of the inherent risks a new employer joining the scheme, such as our client Kamco, would incur,” she continued.

“He would have known there was a potential risk of claims from employers and that PPT had no assets to defend or pay out on those claims. Instead, he sanctioned actions for PPT to pursue changes to the Section 75 legislation, which failed, by which time it was too late for our client and many other employers, who had already become participating employers of the scheme and so ‘on the hook’ for their share of the Section 75 debt.”

Pickering declined to comment.