Pension gaps and public funds: the Morton's Rolls story you need to understand
But here’s where the issue gets really urgent and controversial: workers say money deducted from their wages for a pension never reached the scheme, and the company later collapsed. Now, public funds may be used to cover those missing contributions. Here’s a clear, beginner-friendly breakdown of what happened, why it matters, and what’s being done to fix it.
What happened
- Morton's Rolls Limited, a beloved Glasgow bakery famous for its crispy morning rolls, ran into serious financial trouble and went into liquidation in 2023.
- Former employees claim their pension contributions were deducted from wages but were not paid into Standard Life’s pension scheme during the run-up to the collapse.
- Evidence reviewed by BBC Scotland shows gaps in pension payments stretching from 2020 to 2023, with some months missing entirely.
Why this matters
- Pension schemes rely on regular employer contributions to grow funds for retirees. When payments are missed, the long-term value of those pensions can shrink, leaving workers with less security in retirement.
- In this case, workers continued to see deductions on pay slips, yet the corresponding contributions did not appear in the pension plan, prompting questions about accountability and safeguarding of funds.
What authorities are doing
- The UK Insolvency Service indicates that National Insurance funds will be used to cover the missing pension contributions that were not paid by the employer.
- The situation is complex because some of the money was already deducted from employees’ wages, while the employer failed to forward it to the pension provider. When a company goes into liquidation, government-backed schemes, like the Redundancy Payments Service (RPS), may step in to ensure workers receive owed entitlements.
What workers are saying and illustrating
- Nancy Dunnachie, whose husband William worked for Morton’s Rolls, recalls his reports calling the employer a “shower of rogues” as she navigates a pile of pension letters that say contributions were “not received” for various dates.
- William’s payslips show consistent pension deductions, yet the letters claim missing payments. Nancy notes the redundancy payout eventually arrived in her name after a lengthy legal fight, highlighting the emotional and financial strain from the process.
- Alan Love, a former driver who served 32 years, shared a Standard Life statement showing gaps between late 2021 and early 2023. He emphasizes that wages were deducted weekly, so informing him where the money went becomes a pressing question.
What is being done for redundancy payments
- Morton's collapsed, but a new owner, Phoenix Volt Limited, took over some assets and temporarily recalled workers. This led to a two-year dispute over whether an element of redundancy pay should come from the government’s Redundancy Payments Service, because the original employer was in liquidation when the transfer occurred.
- An employment tribunal ruled that workers were entitled to some payments from the Redundancy Payments Service, which will disburse funds from the National Insurance Fund. The potential total payout across the affected group could be around £500,000, with some estimates suggesting it could reach up to £1 million when additional compensation is considered.
What experts and solicitors say
- Paul Kissen of Thompsons Solicitors notes that while the tribunal process was necessary to determine liability, the length of the wait was unsatisfactory. He advocates for faster resolution when large numbers of people are involved.
- In some cases, claimants may seek a broader remedy, such as a protective award for failing to consult workers before redundancy, potentially increasing total compensation funded by the National Insurance Fund.
- The wide disruption left many employees without financial means for extended periods, and some faced serious health and other life consequences as a result.
What the pension provider and regulator say
- Standard Life outlines an established process for late employer contributions: payments are due by the 21st of the following month, followed by a 90-day chase, involvement of the Pension Regulator if needed, and notification to scheme members about outstanding payments.
- The Pensions Regulator emphasizes its role in enforcing compliance but refrains from commenting on individual schemes or employers unless appropriate to do so.
Current status
- FRP Advisory Trading was appointed administrator for Morton's Rolls Limited. The administrator has filed another application with the Redundancy Payments Service to cover unpaid pension contributions.
- Under current rules, employees can reclaim contributions deducted from wages but not paid into the pension scheme for up to 12 months prior to the employer’s insolvency.
- The Insolvency Service has reviewed the rulings and decided not to appeal. The Redundancy Payments Service is actively making payments, including pension-related ones, to affected employees from the National Insurance Fund.
Why this matters for future pensions
- This case highlights the importance of timely and transparent handling of pension contributions, especially when a business faces financial distress. It underscores the need for robust protections for workers and clearer pathways for recovering owed funds when employers falter.
- For employees and unions, the key takeaway is to monitor pension communications, document payroll deductions, and seek prompt guidance from regulators or solicitors when discrepancies appear.
What readers can think about
- Should there be faster, more automatic mechanisms to safeguard pension contributions in the face of looming insolvencies? What balance should be struck between protecting workers and managing a company’s orderly wind-down?
- If you were a worker in a similar situation, would you pursue government-backed compensation, private recourse, or a combination of both? Share your thoughts and experiences in the comments to help others understand the options and trade-offs.
