Directors at failed school face probe over pensions

DIRECTORS of a heavily indebted Scottish private school which went into liquidation in June are set to be investigated for withholding payments to the teachers' pension scheme during the last year.

• St Margaret's School

Unions are concerned that pension payments taken on behalf of staff at St Margaret's School in Edinburgh may not have been paid to the pension fund. "Money was being deducted (for pensions] but it is unclear if it was ever paid. Our legal department is looking into it," a spokesman for the EIS Scottish teachers' union said.

The Scottish Secondary Teachers' Association (SSTA) has also launched an employment tribunal on behalf of staff who were not paid statutory pay increases.

"It is now in the hands of our solicitors who are supporting members," said SSTA general secretary Ann Ballinger. "They will make a claim for loss of deduction from wages and money not received."

It is understood the Scottish Public Pensions Agency, which administers the Scottish Teachers Scheme, has requested payslips as proof the school may not have been passing on pension payments collected on behalf of staff as far back as August 2009.

A Scottish Government spokesman said: "The Scottish Public Pensions Agency is currently liaising with the school's liquidator and will ensure the pension rights of staff accrued up until the school's closure are honoured."

Blair Nimmo, which is acting as the school's liquidator for accountancy firm KPMG, confirmed there were unpaid pension contributions that had been deducted from staff wages, but stressed this was common in companies that were insolvent and that teachers would not be out of a pension. "Any deductions not paid over will be paid for through the government redundancy payments office. The pensioners will not be any worse off."

The school also ran a small private pension scheme for staff who were not teachers although Nimmo said the liquidators were "not clear" on their situation. KPMG must submit a report to the Department for Business, Innovation and Skill's Insolvency Service on the conduct of directors within six months of being appointed. If the directors or governors have been found to have in breach of fiduciary duty, the Insolvency Service can strike them off and prevent them from acting as directors anywhere for two to 15 years.

"In insolvency situation it is very common for non-essential payments - those not needed to allow a school to trade on a day to day basis - can be delayed. It is not right but it is very common," Nimmo added.

In 2008 the school had about 800 pupils, but numbers at the fee-paying school had fallen to about 300.

According to the last accounts filed by St Margaret's School for the year ended July 2008, the school made a loss of more than 500,000. At the time its auditors warned the school would have to cut costs and increase revenues in order to meet the terms of its 2m overdraft with the Royal Bank of Scotland.