A CROSS-PARTY group of Scottish MPs is calling on the UK Government to take action to ensure a group of retired business owners do not face financial ruin due to a quirk in pensions legislation.

As reported in The Herald this week, employers such as 71-year-old Murray Menzies from Inverness have been hit with huge bills from industry pension scheme Plumbing Pensions because of a loophole in a 2005 law that was designed to stop large corporations shirking their pension responsibilities.

The chief executive of Plumbing Pensions Kate Yates has said that while she does not want to chase individuals for sums of money that would ruin them but make little impact on the £2 billion scheme, without a change in the law she is duty bound to do so.

READ MORE: Only a change to the law can save our members, Plumbing Pensions boss says

Despite it being clear that the law is requiring individuals with few financial means to pay large sums of money to a pension scheme that is fully funded on an ongoing basis, the Department for Work and Pensions (DWP) confirmed last year that no changes or exemptions would be made. Plumbing Pensions therefore began calling in its so-called Section 75 debts in the summer.

SNP MP Pete Wishart, who chairs the All-Party Parliamentary Group (APPG) for Plumbers’ Pensions, said that ministers are “running away from” what could end up being “a huge issue” because there are around 1,000 other multi-employer schemes in the UK.

His APPG colleague Alistair Carmichael, the Liberal Democrat member for Orkney and Shetland, agreed, noting that “simple justice would demand that a solution is found to help these people”.

For Conservative MP Kirstene Hair, the fact that the bills being sent out are hugely inflated because hundreds of employers were allowed to leave the scheme before the employer-debt rule was introduced shows the Government has a duty to act.

“I led an adjournment debate in Parliament on this issue last year, and raised it with the Government in writing on several occasions,” she said. “However, small, independent employers are still being affected.

“It is inconceivable that anyone who contributed to this legislation would have imagined they were creating a system that can leave ordinary, hard-working plumbers facing six- or seven-figure bills.

“Going forward, I urge the Government to look into all options to give these people the peace of mind they deserve.

“That should include addressing the injustice of employers having to pay for liabilities incurred by employers who exited the scheme prior to 2005.”

READ MORE: Retired plumber fears financial ruin over £1.2m pension scheme debt

Ged Killen, the Labour member for Rutherglen and Hamilton West, agreed, noting that it is “concerning that little appears to be getting done to support employers who signed up to the plumbing pension scheme and are now left with bills running into the millions”.

“Some of those affected did not receive debt notices for many years and were never informed of any problems, and are now facing having to sell their homes to settle the debt being claimed,” he said.

“Parliament surely did not intend to bankrupt ordinary people, and I would call on the Government to now properly communicate with and support those who are being lumbered with potentially ruinous debt.”

The Government’s position, as set out in a DWP White Paper issued last year, is that “the existing arrangements provide sufficient flexibility for employers to manage their Section 75 debts”.

Although easements such as flexible-apportionment and deferred-debt arrangements can be used to set Section 75 debts aside for now, Ms Yates said all they do is “push the can down the road”. The hope is that by the time the debts do eventually become due an actuarial valuation would put them at zero.

However, there is a group of employers like Mr Menzies who cannot access these easements because their businesses were unincorporated. If, like Mr Menzies, they are now retired it is impossible for them to change the structure of their business in order to access one.

“The group that most worries me is unincorporated employers who are retired,” Ms Yates said. “There’s very little they can do because there are no easements that can easily help them.”

A DWP spokesman did not respond to questions about whether the Government will review its stance now situations like Mr Menzies’ have come to light.

“We have a duty to protect members in their retirement and to ensure schemes are properly funded,” he said. “We’ve introduced greater flexibility to help employers manage their debts.”

READ MORE: Plumbing firms now ‘worthless’ due to impact of pension laws

Despite this, Ms Yates said the pension scheme would continue to push the Government to look again at the issue.

“We’re still pursuing this and hope that some solution will be found, but parliamentary time is being distracted,” she said.

“We’re getting closer to the end of the road and need a special solution for the people in this group where there are no easements that can help. That can only come from the Government.”