Plumbing Pensions has agreed to extend the period where no participating employer can leave the scheme for a further six months, in order to help ensure the short-term future of the covenant.
Trustee directors of the £2bn scheme agreed the extension, due to expire on 1 January, as “there was a risk that certain employers were able to release themselves from any future obligation to the scheme”, which could worsen the scheme’s funding position.
In October 2018, the schemes 360 participating employers, representing over 35,000 members, expressed their support for closing the scheme to future accrual.
Delivering an update on the rule change, Plumbing Pensions, said: “The trustee directors felt that the rule change extending the date was necessary to provide all the scheme’s stakeholders with time to discuss and decide on how to secure a strong and equitable future for the Scheme in terms of benefit design, funding and covenant.”
Following their support, employers had until 7 April 2019 to contact active members about scheme closure from 30 June 2019.
Trustees agreed the extension with the Association of Plumbing and Heating Contractors, the Scottish and Northern Ireland Plumbing Employers Federation and Unite, the union.
The scheme added: “The trustee, the constituent organisations and participating employers believe the contribution increases required would be unaffordable for many employees and employers (even if they were shared differently), which is why the trustee is considering closing the scheme.”
Alternative options, including changing the 2:1 contribution sharing ration, reducing the benefits provided and introducing a defined contribution section have all been discounted.