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It seems like the governments officials overseeing the scheme don't see anything wrong with Section 75: > The Department for Work and Pensions spokesman said t

It seems like the governments officials overseeing the scheme don't see anything wrong with Section 75: > The Department for Work and Pensions spokesman said the rules were in place to ensure schemes were adequately funded. > He said: "We have a duty to protect members in their retirement, ensure schemes are properly funded and work with those employers who remain in a multi-employer scheme. It seems like a giant clusterf*ck was introduced in 2005. 1. It wasn't properly communicated to anyone 2. There was a loophole that allowed a company to exit the pension for £1 3. The remaining businesses to cover the share of the deficit for everyone who had exited the scheme. 4. Most of these businesses didn't learn of the deficit until 2016, a decade after the the new math went into effect. If the pension didn't do their duty to warn businesses of the deficit in 2005, it should be on their heads to fund the deficit, and they should not be allowed to pull from the pension fund, they have to pull from their own money. Had these businesses known 10 years ago, they could have been paying all along an increased pension rate for their employees.

rtkwe 7y ago
> and they should not be allowed to pull from the pension fund, they have to pull from their own money. What's the pension's own money here? Everything they manage should nominally be part of the fund owed to their retirees. Where do you propose they actually draw money from?
- jermaustin1 7y ago
  Their management fees. They aren't running a charity, they collect from the $1000 pension fund a 1-2% management fee (if similar to US 401k administrators). And if they don't have enough cash to add back into the fund, they need to take on debt to fund THEIR shortfall. The businesses were not told to increase their funding obligation from the start, so they should be off the hook.
  - undecisive 7y ago
    You are right, in a way. If they can't service the debts themselves, and they can't take out a loan to cover it, they have to go bankrupt. In reality, the pension provider probably should declare bankrupcy. In theory, FSCS / PPF should kick in and most people should still get some kind of pension out of it - albeit a lot less than they expected. However... I don't know much about the bankrupcy procedure. Would administrators have to be called in? Would they then chase these customers anyway? I don't see any way out of this cock-up of a law without the law itself being changed. It's bonkers. [UPDATE] Actually, it turns out that's almost exactly what they've done https://www.plumbingpensions.co.uk/plumbing-pensions-to-close-on-30-june-2019-2/ https://www.plumbingpensions.co.uk/plumbing-pensions-to-clos... By closing their doors and handing the pension pots on to other providers, anybody still a member is completely safe. The problem is, the guy in the original post stopped being a member, which is what has triggered the legal problems. If you want to see the government position on this, it's here: https://researchbriefings.parliament.uk/ResearchBriefing/Summary/CBP-7684 https://researchbriefings.parliament.uk/ResearchBriefing/Sum... ... and they aren't willing to do anything about it, for fear that people might use any fallout mitigation to walk away from being responsible employers.
    - throwaway5752 7y ago
      Look at the PBGC in the US and the rampant abuse (socialization of the cost of "mild" white collar crime - shortfalls that hit well after the fact due to purposefully but mildly underestimating future liability and overestimating future returns) for the other side to the outcome described in the article. Financial regulations are hard. It is like infosec, where you have well funded adversaries who are sometimes criminals.
      - dantheman 7y ago
        Let's just look at US public pensions - the overestimation of future returns is insane.
    - rtkwe 7y ago
      The description makes it sound like they're not /actually/ underfunded just underfunded assuming they have to pay for someone else to take over fund and wrap up their fund right?
- throwaway_law 7y ago
  The pension are presumably insured to cover their negligence and liabilities...including failure to properly notice employers/members of the fund in breach of their duty to do so, which resulted in damages. Otherwise it comes directly from the pension (which isn't just a fund made up of employer contributions, it is a business entity that takes fees from the fund itself)
throwaway_law 7y ago
>If the pension didn't do their duty to warn businesses of the deficit in 2005, it should be on their heads to fund the deficit The irony is the Pension claimed they couldn't notice the employers at the time (which would have given the opportunity to buy out for 1 Euro) because they would have had to research the contact info for thousands of employers...yet the Pension seems to have no problem doing the research now and noticing these employers of their Million+ Euro liabilities.
- TheOtherHobbes 7y ago
  The real irony is that the UK government has just killed the pensions of an entire generation of older women by raising the retirement age without notice. So going after small businesses to enforce an onerous rule change is entirely hypocritical.
  - Zenst 7y ago
    >raising the retirement age without notice Notice was given - https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/310231/spa-timetable.pdf https://assets.publishing.service.gov.uk/government/uploads/... What would be a fair notice period or formula is probably the area of debate.
TazeTSchnitzel 7y ago
Sort of off-topic but for context, the “Department of Work and Pensions” (DWP, previously the “Department of Social Security” but renamed for ideological reasons) has been repeatedly caught making blatant lies in publicly released material in recent years, and are widely despised by anti-poverty and disability-rights activists. So do not take their statements at face value.

rtkwe 7y ago

> and they should not be allowed to pull from the pension fund, they have to pull from their own money. What's the pension's own money here? Everything they manage should nominally be part of the fund owed to their retirees. Where do you propose they actually draw money from?

jermaustin1 7y ago
Their management fees. They aren't running a charity, they collect from the $1000 pension fund a 1-2% management fee (if similar to US 401k administrators). And if they don't have enough cash to add back into the fund, they need to take on debt to fund THEIR shortfall. The businesses were not told to increase their funding obligation from the start, so they should be off the hook.
- undecisive 7y ago
  You are right, in a way. If they can't service the debts themselves, and they can't take out a loan to cover it, they have to go bankrupt. In reality, the pension provider probably should declare bankrupcy. In theory, FSCS / PPF should kick in and most people should still get some kind of pension out of it - albeit a lot less than they expected. However... I don't know much about the bankrupcy procedure. Would administrators have to be called in? Would they then chase these customers anyway? I don't see any way out of this cock-up of a law without the law itself being changed. It's bonkers. [UPDATE] Actually, it turns out that's almost exactly what they've done https://www.plumbingpensions.co.uk/plumbing-pensions-to-close-on-30-june-2019-2/ https://www.plumbingpensions.co.uk/plumbing-pensions-to-clos... By closing their doors and handing the pension pots on to other providers, anybody still a member is completely safe. The problem is, the guy in the original post stopped being a member, which is what has triggered the legal problems. If you want to see the government position on this, it's here: https://researchbriefings.parliament.uk/ResearchBriefing/Summary/CBP-7684 https://researchbriefings.parliament.uk/ResearchBriefing/Sum... ... and they aren't willing to do anything about it, for fear that people might use any fallout mitigation to walk away from being responsible employers.
  - throwaway5752 7y ago
    Look at the PBGC in the US and the rampant abuse (socialization of the cost of "mild" white collar crime - shortfalls that hit well after the fact due to purposefully but mildly underestimating future liability and overestimating future returns) for the other side to the outcome described in the article. Financial regulations are hard. It is like infosec, where you have well funded adversaries who are sometimes criminals.
    - dantheman 7y ago
      Let's just look at US public pensions - the overestimation of future returns is insane.
  - rtkwe 7y ago
    The description makes it sound like they're not /actually/ underfunded just underfunded assuming they have to pay for someone else to take over fund and wrap up their fund right?
throwaway_law 7y ago
The pension are presumably insured to cover their negligence and liabilities...including failure to properly notice employers/members of the fund in breach of their duty to do so, which resulted in damages. Otherwise it comes directly from the pension (which isn't just a fund made up of employer contributions, it is a business entity that takes fees from the fund itself)

throwaway_law 7y ago

>If the pension didn't do their duty to warn businesses of the deficit in 2005, it should be on their heads to fund the deficit The irony is the Pension claimed they couldn't notice the employers at the time (which would have given the opportunity to buy out for 1 Euro) because they would have had to research the contact info for thousands of employers...yet the Pension seems to have no problem doing the research now and noticing these employers of their Million+ Euro liabilities.

TheOtherHobbes 7y ago
The real irony is that the UK government has just killed the pensions of an entire generation of older women by raising the retirement age without notice. So going after small businesses to enforce an onerous rule change is entirely hypocritical.
- Zenst 7y ago
  >raising the retirement age without notice Notice was given - https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/310231/spa-timetable.pdf https://assets.publishing.service.gov.uk/government/uploads/... What would be a fair notice period or formula is probably the area of debate.

TazeTSchnitzel 7y ago

Sort of off-topic but for context, the “Department of Work and Pensions” (DWP, previously the “Department of Social Security” but renamed for ideological reasons) has been repeatedly caught making blatant lies in publicly released material in recent years, and are widely despised by anti-poverty and disability-rights activists. So do not take their statements at face value.