14 March 2008 – The Occupational Pension Schemes (Employer Debt and Miscellaneous Amendments) Regulations 2008 introduced

Minister for Pensions Reform Mike O’Brien today announced the introduction of regulations governing the amendments to the existing provision in the Employer Debt Regulations.  The regulations will come into force on April 6, 2008.

Mike O’Brien said:

“These provisions are designed to strike a balance between making the existing employer debt regulations more flexible in their operation, and discouraging the avoidance of pension liabilities by scheme sponsors.

“The regulations introduce a number of important changes including a twelve month period of grace for new members to join a multi-employer scheme before a debt is triggered; new arrangements for the apportionment of debt; new types of withdrawal arrangement; and transitional arrangements to allow transactions already agreed or in negotiation to continue to use old rules for up to twelve months of these regulations coming into force.

“But the work on employer debt does not stop here. Following on from the deregulatory review, we will work over the coming months with the pensions industry to see if it is possible to seek a practical solution to the problem of company reorganisations triggering the employer debt provisions, without undermining the principle that employers should fully meet their pension obligations.”

Notes to Editors

1. When employers sever their links to a defined benefit occupational pension scheme, Employer Debt legislation makes a number of detailed provisions on how the debt should be met.
2. The Occupational Pension Schemes (Employer Debt) Regulations 2005 [S.I. 2005 no. 678] were made as a consequence of provisions in the Pensions Act 2004 (c. 35) and replaced the Occupational Pension Schemes (Deficiency on Winding Up etc.) Regulations 1996 (S.I. 1996/3128) where debts arise under section 75 of the Pensions Act 1995 (c. 26) ("the 1995 Act") in respect of occupational pension schemes. These Regulations - which govern employer liability to a defined benefit pensions scheme upon exit of the sponsoring employer - came into force on 6 April 2005.
3. The Occupational Pension Schemes (Winding Up) (Modification for Multi-employer schemes and Miscellaneous Amendments) Regulations 2005 [S.I. 2005 no. 2159] modify the position under the 1995 Act. These Regulations came into force on 31 August 2005.
4. The Occupational Pension Schemes (Employer Debt and Miscellaneous Amendments) Regulations 2008 [S.I. 2008 no. 2008/731] include a number of substantive and technical amendments to the existing legislation, which make withdrawal arrangements easier to use, reduce the likelihood of misusing the apportionment rule, and resolve a number of more technical issues.

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