Jurisdiction(s):
United Kingdom

DPO under Scots law: negligent misstatement and maladministration on section 75 employer debt after incorporation; no prescription defence; enforceable only on certification; partial set-off, compensation, complaint partially upheld

Published on: 16 January 2024

Published by a LexisNexis Pensions expert

Legal News

Article summary

Original news Mr S (CAS-39170-Y5Q0)—13 October 2023

Summary

The DPO has partly upheld a complaint concerning a section 75 liability arising within a non‑segregated defined benefit scheme governed by Scots law. The complainant, an employer participating in the scheme, had incorporated his sole‑trader plumbing business. He was wrongly assured that incorporation would have no impact; in reality, it triggered a section 75 employer debt under the Pensions Act 1995. Because of the scheme’s complexity, the company was not told the amount of the liability for well over six years.

The DPO decided that:

no limitation or prescription defence applied;
the scheme administrator made a negligent misstatement about the impact of changing the business’s legal status, the complainant reasonably relied on that advice, and suffered financial loss; and
the failure to provide timely notice that a section 75 debt had arisen was maladministration.

This outcome highlights the complexity of the employer debt framework and the importance of seeking advice.

What were the facts?

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