Plumbing & Mechanical Services (UK) Industry Pension Scheme (CAS-39170-Y5Q0)

Ombudsman’s Determination

Outcome

The complaint is partly upheld against the Trustee because:-

The seven-year delay in notifying Mr S that a section 75 liability had been triggered as a result of an employment cessation event, and in commencing the process of determining the amount in accordance with the legislation relating to employer debts, constitutes maladministration. This has resulted in Mr S sustaining non-financial injustice (distress and inconvenience). Mr S was deprived of the opportunity to order his financial affairs and take steps to address the section 75 debt at an earlier date as a consequence of these failures.

The Administration Company, as agent of and on behalf of the Trustee, assumed a duty of care to Mr S. There was a breach of that duty of care. It was reasonable in the circumstances of this case for Mr S to rely on the information (without taking further specialist advice or seeking further confirmation in writing). The inaccurate information was relied on by Mr S to his financial detriment.

Complaint summary

Mr S’ complaint concerns a proportionate share of the Scheme’s funding deficit, estimated to be £283,000 (the sum), which the Trustee is seeking from him after an employer debt was triggered under section 75 and 75A of the Pensions Act 1995 (a “section 75 debt”). In particular:-

The sum is not recoverable by the Trustee, as recovery is time barred under the Limitation Act 1980 (the Limitation Act) or the Prescription and Limitation (Scotland) Act 1973 (the 1973 Act).

The sum is unactionable, irrespective of whether or not Prescription/Limitation applies, and cannot be pursued because of the conduct of the Trustee since 2005. In particular, it pursued a policy of ignoring its legal obligations under the debt regulations and attempting to convince Parliament to change the relevant legislation. Participating employers were not made aware of this and were deliberately misinformed. He would not have taken action to trigger a section 75 debt by virtue of incorporation of his business but for this “unilateral policy” on the part of the Trustee.

The sum is unactionable, irrespective of whether or not Prescription/Limitation applies, and cannot be pursued because the Trustee provided his wife, (Mrs S), with misleading and incorrect information concerning the impact of the incorporation of his business from sole trader to a limited company.

The situation, he now finds himself in, is the result of the Trustee’s failure to properly manage conflicts of interests on the Trustee Board (the Board).