Plumbing Pensions has submitted a petition to Court of Session in Edinburgh, querying whether it can use scheme funding to cover expenses for recovering section 75 employer debt.

Plumbing Pensions is the trustee of the Plumbing and Mechanical Services (UK) Industry Pension Scheme and has no funds of its own.

It is therefore seeking direction on whether it can rely on the indemnity clause in the scheme's rules to cover for section 75 employer debt matters.

The trustee wants to know about the circumstances in which it is entitled to an indemnity from the scheme's funds.

The Plumbing and Mechanical Services (UK) Industry Pension Scheme is a DB multi-employer scheme with over £2bn in assets and has had around 4,000 employers providing pensions to approximately 40,000 members.

Since September 2005, pension legislation has required employers who leave a multi-employer scheme to pay 'section 75 debt' to the scheme.

A section 75 employer debt is equal to the departing employer's share of the shortfall in the scheme on a buyout basis.

Over 3,500 employers have left the scheme since 1975 and in most cases have not paid the section 75 debt required by current legislation.

Plumbing Pensions said that it was previously unable to calculate the debts, but is now able to do so and said that in “many cases” the amount is “very substantial”.

It has been issuing section 75 debt notices to relevant employers, which has led to some raising complaints against the trustee on “a number of different grounds”.

Plumbing Pensions is therefore seeking clarification as to whether it is able to use scheme funds to cover expenses.

Commenting on the petition, Plumbing Pensions chief executive, Kate Yates, said: “Section 75 employer debt legislation is complicated. 

“The trustee is doing the responsible thing by checking whether it can continue to use scheme funds to deal with section 75 employer debt matters.”

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