Occupational Pensions

(asked on 7th February 2020) - View Source

Question to the Department for Work and Pensions:

To ask Her Majesty's Government what duties the trustees of non-associated multi-employer pension schemes have to employers contributing to the scheme; and whether all such employers have a right to be consulted when trustees grant apportionment arrangements to departing employers.


This question was answered on 19th February 2020

The employer debt legislation (section 75 of the Pensions Act 1995 and the Occupational Pension Schemes (Employer Debt) Regulations 2005) sets out the requirements on departing employers where any shortfall between liabilities and assets in a Defined Benefit pension scheme is treated as due.

Trustees of all occupational pension schemes including non-associated multi-employer pension schemes have a duty to employers contributing to the scheme to ensure that the scheme is correctly administered in accordance with its rules and that the promised benefits are paid. Where a restructuring event takes place, trustees are required to consult the exiting employer and receiving employer about the likelihood of the receiving employer being able to meet all the exiting employer’s liabilities in relation to the scheme. The trustees must also notify the exiting and receiving employer (in writing) of their decision as to whether they consider the receiving employer capable of meeting all the exiting employer’s liabilities to the scheme.

Whilst there is no general requirement for trustees to consult employers when granting apportionment arrangements to departing employers, the Occupational Pension Schemes (Employer Debt) Regulations 2005 require the consent of employers within the scheme when trustees grant Regulated Apportionment Arrangements, Scheme Apportionment Arrangements and Flexible Apportionment Arrangements to departing employers.

The Government’s Green and subsequent White Paper on Defined Benefit pension schemes looked very closely at this issue and considered carefully what could be done to relieve the pressure some employers face from their obligation to pay an employer debt.

The White Paper concluded that the existing arrangements in legislation, along with the deferred debt arrangement introduced in April 2018, provide enough flexibility for employers to manage their employer debts and the current “full-buyout” calculation method is the most secure and effective way of protecting members and remaining employers in a multi-employer scheme.

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