Defined Benefit  

Field blasts lack of support for plumbers’ pensions

Field blasts lack of support for plumbers’ pensions

Independent Labour MP Frank Field has called on the government to do more to support plumbers who are being hit with million-pound pension bills.

As first reported by FTAdviser's sister publication Pension Expert, the chairman of the Work and Pensions select committee has written to pension minister Guy Opperman pointing out that the employers of the plumbing scheme had not received debt notices for many years and were never alerted to the problems they would face.

He said: "It is very disappointing that many of these employers might have been in a better position, or at a minimum better informed, if they had received better support from the scheme."

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The Plumbing and Mechanical Services (UK) Industry Pension Scheme started issuing section 75 debt notices for the first time in April, following a data matching exercise to find old employers which didn’t pay what they owed when they left the scheme.

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

This happens in cases of insolvency or when the company stops employing active scheme members.

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

Mr Field was responding to Mr Opperman’s letter on this matter, where he stated that "this is a very difficult case where there are no easy solutions".

He said: "Your letter rightly highlights that this is a difficult case, but much more needs to be done to ensure the employers in this scheme are properly supported and the trustees carry out their duties effectively."


The plumbing scheme has more than 35,000 members – of which 3,200 are active - and assets of £2bn.

The section 75 debt requirement was introduced in 1997 and assessed on the minimum funding requirement.

In 2005, the legislation was changed and the employer debt started to be calculated on a buy-out basis – in which an insurance policy is issued to each pension scheme member individually – which increased the orphan liabilities.

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

In his letter dated April 12 Mr Opperman revealed that he had met with a number of employers and their representatives from this particular scheme.

He also mentioned that the Department for Work and Pensions had considered this matter in its defined benefit white paper, published in March 2018, where it stated that "there is insufficient justification to warrant amending the measure of calculation of these debts".

Mr Opperman said: "It’s important that any attempts to help employers is balanced against the need to ensure that the thousands of members who rely on this scheme are protected.