The treatment of unpaid employee contributions on an insolvency

In the case of Bridge (PO — 194), the Deputy Pensions Ombudsman (DPO) held that an insolvent employer should pay certain outstanding pension contributions, plus interest, which it deducted from an employee’s wages prior to becoming insolvent but failed to pay over to its designated stakeholder arrangement in respect of the employee.

Mr Bridge was a member of the Group Stakeholder Pension Scheme of his employer, Elton Games. Mr Bridge’s employment was terminated in March 2012 and the employer went into voluntary liquidation the following month.

Since November 2008, due to its worsening financial position, the employer had failed to pay over a number of pension contributions in respect of Mr Bridge to the scheme. In November 2010, the employer wrote to the Pensions Regulator to seek approval of a repayment plan it had drawn up to repay the missed contributions. The regulator responded that it could not approve or reject the plan but that, although the employer had breached its legal obligations under the Personal Pension Schemes (Payment by Employers) Regulations 2000, the regulator would not exercise its powers in relation to that breach at that stage. Unfortunately, the repayment plan had not been satisfied when the employer went into liquidation in 2012 and further contributions had been missed…

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