Published by Chris Hawley on
Estimated reading time: 4 minutes
Together with Matthew Giles of Squire Patton Boggs, we explore the arising issues and what challenges are open to these employers.
The Plumbing Scheme has now started issuing indicative debt amounts, giving employers a period of 6 weeks to challenge the calculation and amounts.
The challenges facing the Plumbing Scheme surrounding historic section 75 exit debts have been well publicised. Essentially, due to a lack of information in historic records regarding employment history, the Plumbing Scheme has not been able to calculate and issue debts to employers who have ceased to participate in the Scheme since September 2005.
The Trustee of the Plumbing Scheme has explained that it has spent a lot of time lobbying and communicating with the various regulatory powers about way the section 75 debt is applied. After several years - in 2014, the Trustee started work with its advisers on the process to begin calculating and recovering section 75 exit debts.
More recently, there has been multiple consultations with employers about the method for calculating the debts. The Plumbing Scheme has now started issuing indicative debt amounts, giving employers a period of 6 weeks to challenge the calculation and amounts, as well as opportunities to discuss payment options before a formal debt is issued to the employer.
The way employer debt legislation applies in these circumstances is very complicated and there are numerous grounds for legal challenge, such as.
Some of the debt amounts are very large and daunting to even the largest employers. There are a range of points which can be investigated to check whether the amount is reasonable or not. The challenges will very much depend on the quantum of the debt and the views of the former employer.
If you receive a debt illustration, think carefully about the amount and whether you plan on challenging the amount.
If the amount is acceptable then you should engage with the Plumbing Scheme (within the 6 week period) to discuss the payment schedule as there may be options to spread payment over a period of years.
This blog is a combined effort with Matthew Giles, a Partner and Head of Pensions Lawyers in the Birmingham office of Squire Patton Boggs. He has worked closely with Barnett Waddingham's Chris Hawley (biography below) to provide clear insight and advise to ensure that the legal issues are accurate in order to help employers through these critical challenges.