A disgruntled Scot has sent me this clip from the Herald, a Scottish digital paper not much read down south where I am writing from.
Employer and employee pension contributions for workers at Sanjeev Gupta’s Lochaber smelter have not been paid since July, The Herald can reveal.
An email sent to staff at the aluminium smelter and at Jahama Highland Estates on Thursday by Jeff Kabel, chief transformation officer at Liberty Steel Group, said the company had notified the Pensions Regulator.
When I read this I supposed that wages had not been paid and hence no pension contributions (as these at Liberty are a percentage of wages – DC as we call it).
But it would seem that this is a case of pension contributions not wages that are not being paid.
Will employers start considering a pension contribution a luxury that they can stop paying when times are hard? It would be much easier if they considered the pension contribution as deferred pay and as important as the wages paid in pay-packets.
This isn’t thought about enough. Spending time with unions , with CFOs and HRDs I can see that where pensions are counted as deferred pay, they are taken a lot more seriously than when they are paid into a pot for a member of staff’s general welfare.
I fear that employers who don’t consider pension contributions as part of the reward will , as Liberty (that took over much of British Steel) have done, de-prioritise pension contributions for whatever reason.
This is where the Pension Regulator needs to bare its teeth and make it absolutely clear that pension contributions are deferred pay. The sooner we start thinking again of pensions as a wage in retirement, the sooner contributions to them will be considered as pay. If people are promised wages and not paid them, there is undoubted reason to take industrial action. The Pension Regulator can make sure that doesn’t happen.
Steel workers pensions seem to lead the way in bad news on Pensions:
2002 Allied Steel and Wire – Pension scheme wound up and unable to pay pensions led to the Financial Assistance Scheme
2017 British Steel (Tata) Pension Scheme scandal – restructuring leading to criminally mis-sold transfers to DC schemes (some fraudulent).
2026 Liberty Steel – forced liquidation / nationalisation of the employer with the Government forced to cover accrued pay and pension contributions into the British Steel successor DC pension scheme with Aviva.
https://www.sharecast.com/news/news-and-announcements/uk-govt-to-pick-up-wages-pensions-at-collapsed-liberty-steel-plant–20749621.html
Would the costs to the taxpayer not be less if steel workers pensions had run on in DB and protected by the PPF?
From speaking to several employees I fear this is a common problem, especially I would say with small businesses. My guess is that when times get a bit tough the owner is tempted to hold back the contributions a few extra days with the intent of paying the following week say. Then they find that no-one has noticed. So much like ‘borrowing’ from petty cash, the length and size of the loan gets longer.
As many pension scheme members never look at their pension account they don’t realise contributions are not being paid.
The scheme may eventually notify them and TPR that there seem to be missing contributions but it may be years, if ever, that intervention results. TPR has to direct it’s resources at the biggest issues so a small employer delaying a few hundred pounds on an individual, even if that continues over a long period, is not going to be a high priority.
Employees who do eventually notice there is an issue might contact TPO but TPO won’t usually get involved until IDRP is exhausted. But if the employer doesn’t properly engage, and repeatedly fails to keep their promise to correct the issue, the IDRP is never completed. Employees often fear being considered trouble makers and losing hours or work, in the current climate many won’t take that risk and just give up.
Meanwhile the employer is laughing in the face of the authorities as they jog on to the bank.
I think both TPO and TPR need more resources to take faster action on a greater number of cases, and to name and shame the guilty with improved press coverage.
I disagree that TPO and TPR need more resources.
I suggest some of their staff need to focus on action rather than simply writing stuff down or entering into their systems.
They do have good people, but not all of them.
Maybe it’s leadership which is lacking at times?
The Lochaber case, at least based on Scottish newspaper reports which I drew to Henry’s attention, seems to involve Aviva and their AML procedures declining contributions being paid in from
an employer’s overseas bank account.
I’m sure many of us will have had personal experience of bank control checks, but these shouldn’t hold up contributions not being collected for three months …
TPR needs to take action, knock heads together, having been notified by the employer back
in July.
A spokesperson for the Pensions Regulator said: “We take non-compliance with pension duties seriously but do not comment in relation to individual employers or pension schemes unless appropriate to do so.
“To ensure people get what they are due, we first and foremost support employers to meet their legal automatic enrolment duties.
“But where necessary, we will take action using our powers to protect people’s savings.”
Fair enough. I don’t speak from insider knowledge, it’s just my perception as an Outsider-looking-in from speaking to scheme members.