TPR warns employers against avoiding pension scheme liabilities

The Pensions Regulator (TPR) has warned employers participating in the Plumbing & Mechanical Services (UK) Industry Pension Scheme that it will take regulatory action against businesses attempting to avoid their pension liabilities.

The warning follows enforcement action against Cliden Construction Limited (CCL), after the regulator found the company had paid dividends before entering liquidation instead of using the funds to meet its pension obligations.

TPR has published a regulatory intervention report outlining how it used its anti-avoidance powers to secure a settlement with a former CCL director and a related company, resulting in money being paid back into the scheme.

The defined benefit (DB) scheme has a deficit of around £258m, more than 30,000 members and is supported by over 300 employers.

Under pension rules, employers leaving the scheme must pay their share of the deficit.

If they fail to do so, the liability is redistributed among the remaining participating employers.

According to TPR, CCL triggered a section 75 debt under the Pensions Act 1995 in early 2019 after ceasing to employ active members of the scheme.

Gaucho Rasmussen, executive director of enforcement and legal group at TPR, said: “Members rely on pensions to provide them with a sustainable income in retirement and employers cannot simply walk away from their responsibilities.