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Comment piece from Jon Bridger, Chairman, Plumbing Pensions (UK) Limited
The Plumbing & Mechanical Services (UK) Industry Pension Scheme was set-up in 1975 to provide high quality pension benefits for workers across the UK in the plumbing and mechanical services industry. Through the efficiencies that come from running a large, centralised pension scheme, employees were able to build up retirement benefits until the Scheme closed in summer 2019, that would not otherwise have been affordable for them or their employers.
Today, Plumbing Pensions has over £2 billion of assets and some 33,000 members, with around 350 plumbing employers responsible for funding the Scheme. As Chairman of the Trustee Company, I am proud of the Scheme’s mission to provide cost-effective, efficient, and secure pensions for all of the Scheme’s members.
In recent years, the Trustee has made a number of changes to the Scheme’s investment strategy, and significantly reduced the level of investment risk in the Scheme. This ‘slow and steady’ approach should mean that the Scheme’s financial position is now much more stable and predictable.
The Scheme is currently in a strong financial position. Our latest calculations show that the Scheme currently has enough money to pay all of the benefits promised by the Scheme without the need for any additional contributions from employers. This position will be reviewed following the next formal valuation in 2023.
Although the Scheme is in excellent financial shape, we know that we need to continuously evolve to make sure it continues to serve employers and members in the most effective and efficient ways possible. That is why in 2020, we launched an independent review of our governance structure. The objective of the review was to establish a transparent and efficient decision-making structure which has clear lines of communication, avoids conflicts of interest, and provides an effective forum for all employers to engage with the Scheme.
I want to thank everyone who contributed to our recent consultation and gave us their views on the proposals. We have decided to implement all the proposals set out in the consultation and our aim is that the new governance structure will be up and running later this year. As part of the new structure, there will be opportunities for interested employers to either join the Trustee Board or the new Employer Company that will be set up to represent the interests of employers in relation to the Scheme.
I also want to touch on the Section 75 employer debt legislation as we fully recognise the impact this has on employers, past and present. The Trustee and others, lobbied government to amend this legislation for many years, but politicians and the Department for Work & Pensions have been reluctant to make any changes, and without this, the Trustee would itself be in breach of those rules if we did not follow them as they are written. Many employers have chosen to use one of the legal easements to defer paying their s75 debt or to transfer it to a different employer and, as far as we can, we will continue to support any employer who is concerned about their pension liability to the Scheme. The recent successful outcome of the Petition the Trustee took to Court allows the Scheme to deal with all outstanding section 75 debts.
During the pandemic, the Trustee has closely monitored the Scheme’s funding position, investment strategy and communications with employers. As we emerge from COVID-19, we want all employers and members to continue to have confidence in a Scheme which is responsibly run, in good financial shape and able to pay all members the benefits they are due. To do this we will continue to engage with employers and members, not just about the past, but also the Scheme’s long term goals and objectives in the future.