UK - A legal loophole that saw a pension scheme recently refused admission to the UK's Pension Protection Fund (PPF) must be addressed, or thousands of scheme members could be affected, law firm Hammonds has warned.

The George & Harding (G&H) pension scheme was recently refused admission as the Pension Act 2004, by which the PPF is bound, sees a difference between what is deemed a principal employer and a statutory employer.

Catherine McKenna, head of pensions law in the Leeds office of law firm Hammonds said: "We've got a range of clients whose members are affected. There is a way around this problem, but the legislation should work without schemes having to do a complex work around.

"There needs to be a remedy as thousand of members across the UK could be affected," she added.

Trustees have now written to scheme members urging them to lobby their MPs to waive the legal technicality which has excluded their scheme from entering the PPF.
 
The G&H pension scheme was a multi-employer scheme which shut to new members in 1996. Following the company's acquisition by rival Zejwa in 2002, the scheme restructured and continued to pay its PPF levy.

However in 2009, when the new parent company became insolvent, the scheme was found to be ineligible for PPF membership.
 
Although the company was a principal employer and the scheme sponsor, it was not the statutory employer - a crucial requirement for a scheme to qualify for entry into the PPF.
 
The scheme has 40 members, assets of around £2m and a deficit of £1m on a PPF basis. The PPF has offered the scheme's trustees a return of their levy payments.
 
Bournemouth West MP, Connor Burns, is also seeking a meeting with Pensions Minister, Steve Webb to ask for a waiver for the G&H members and for the law to be amended.
 
Ros Altmann, director general of Saga Group, said: "This technicality means that the PPF net has a whacking great hole in it and not all scheme members are protected. The technicality must be waived for the G&H members and the flaw in the legislation amended because other schemes might be affected. Someone has got to protect scheme members."

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