THE TRUSTEE IS PETITIONING THE COURT FOR DIRECTIONS
On 10 March 2020 the Trustee of the Scheme presented a petition to the Court of Session in Edinburgh. In the petition, the Trustee asked for directions from the Court about the circumstances in which it is entitled to an indemnity from the funds of the Scheme under the Scheme’s Rules.
On 18 March 2020 the Court made an order for the petition to be advertised on the Scheme’s website and to be published by way of advertisement in The Times newspaper. The order also set out a 21 day time-limit for lodging answers to the petition from the date of the advert. The advert in The Times was published on 23 March 2020. In light of the pandemic, the Trustee applied to the Court to extend the period for lodging answers to 35 days ie to 27 April 2020. The Trustee agreed a further 1 week extension and consented to any party seeking to lodge answers at Court up to and including Monday 4 May 2020. The period for lodging answers ended on 4 May. Two sets of answers were received but subsequently withdrawn. Further information can be found here.
The full text of the petition can be found here, the Court’s order can be found here and formal notice can be found here. The petition was sisted (put on hold) until 5 January 2021. There was a further period of adjustment until 10 March 2021. A procedural hearing took place on 30 March 2021 and a one-day substantive hearing took place on 23 July 2021. On 9 September the Court issued a note to explain its reasons for declining to give directions without further investigations taking place. The Trustee carefully considered the options. The Trustee carefully considered the options and on 15 November the Trustee’s lawyers applied to the Court to appoint a Court Reporter, which the court approved. The Court Reporter’s report was submitted to the Court on 25 January 2022. On 2 March 2022 the Court granted the key orders sought in the Trustee’s petition.
The Scheme was established in 1975. Pensions legislation has changed substantially since the Scheme was established. In particular, since 2 September 2005, pensions legislation has required employers in multi-employer schemes (such as the Scheme) who leave to pay an amount known as a “section 75 debt” to the scheme.
Over 3,500 employers have left the Scheme since 1975, in most cases without having paid the amount of the section 75 debt required now by current legislation. The section 75 debts due by employers who have left the Scheme since 2 September 2005 are in many cases very substantial.
Until recently, the Trustee has not been able to calculate section 75 debts, however it is able to do so now and has recently been calculating and issuing section 75 debt notices to the relevant Scheme employers. This has led to some employers raising complaints against the Trustee on a number of different grounds.
In order to carry forward the administration of the Scheme the Trustee needed clarity about whether it could use Scheme funds to cover expenses in relation to section 75 debt-related matters. The Court opinion clearly states that the Trustee is entitled to the indemnity in the Scheme rules. The opinion also refers to various comments made by the Court Reporter including that: “those now involved with the Scheme have done their best to ensure that it has been properly administered in a manner consistent with the relevant legislation and in doing so they have displayed proper standards of care and diligence in administering the Scheme’s affairs.”
A link to the court opinion can be found here.