The Occupational Pension Schemes (Fraud Compensation Payments and Miscellaneous Amendments) Regulations 2005

Non-segregated schemes with an option to segregate on withdrawal of participating employer E+W+S

19.—(1) This paragraph applies to a non-segregated scheme in circumstances—

(a) where—

(i) an insolvency event occurs in relation to an employer in relation to the scheme;

(ii) the trustees or managers of the scheme become aware that an employer in relation to the scheme is unlikely to continue as a going concern and meets the requirements prescribed in regulation 7 of the Entry Rules Regulations; or

(iii) an employer in relation to the scheme is unlikely to continue as a going concern and meets the requirements prescribed in regulation 4 of these Regulations; and

(b) where, under the rules of the scheme, the trustees or managers have an option, in circumstances where an employer in relation to the scheme ceases to participate in the scheme, to segregate such part of the assets of the scheme as is attributable to the scheme's liabilities to provide pensions or other benefits to or in respect of the pensionable service of some or all of the members by reference to that employer (“segregated part”).

(2) Subject to paragraph (3), in the case of a scheme to which paragraph (1) applies, the trustees or managers of the scheme shall be deemed to have exercised the option to create a segregated part of the scheme immediately after the occurrence of an event in paragraph (1)(a)(i), (ii) or (iii) where—

(a) a withdrawal event within the meaning of section 149(2), or

(b) a cessation event in relation to a notice referred to in section 182(9)(b)(iv),

has not occurred in relation to the segregated part.

(3) Paragraph (2) shall not apply where the trustees or managers of the scheme—

(a) decide not to exercise the option to create a segregated part of the scheme; and

(b) in such a case give the Board a notice to this effect as required by—

(i) section 120(3A) or 129(1B) (non-segregation notice), as modified by Part 7 of the Multi-Employer Regulations; or

(ii) section 183(1A) (non-segregation notice), as modified by paragraph (4) .

(4) Section 183 shall be modified in its application to a non-segregated scheme to which paragraphs (1) and (3) apply as if after subsection (1) there were inserted—

“(1A) If, where this section applies to the non-segregated multi-employer scheme, the trustees or managers of the scheme decide not to exercise the option to segregate under the scheme rules so as to create a segregated part of the scheme they must, as soon as practicable—

(a) give a notice to the Board to that effect (a “non-segregation notice”); and

(b) send a copy of that notice to—

(i) an insolvency practitioner acting in relation to the employer, and

(ii) the Regulator.”.

(5) Where paragraph (2) applies, the fraud compensation provisions shall be modified in their application to the non-segregated scheme so that they shall be read as if—

(a) references to “an occupational pension scheme” were to a segregated part of a non-segregated scheme where that part, if it were a scheme, would be a scheme in respect of which the Board shall make a fraud compensation payment in accordance with section 182(1);

(b) references to “an eligible scheme” were to a segregated part of a non-segregated scheme in circumstances where that part, if it were a scheme, would be an eligible scheme;

(c) except as otherwise provided in this regulation, references to—

(i) “the scheme” were to “the segregated part”;

(ii) “the employer” were to “the employer in relation to the segregated part”;

(iii) “the trustees or managers of the scheme” or “the trustees or managers” were to “the trustees or managers with ultimate responsibility for the administration of the segregated part”;

(d) for paragraph (a) of section 182(2) there were substituted—

“(a) in relation to a multi-employer scheme which is not divided into two or more sections (“a non-segregated scheme”)—

(i) a qualifying insolvency event has occurred in relation to an employer,

(ii) the trustees or managers have an option under the rules of the scheme, where an employer in relation to the scheme ceases to participate in the scheme, to segregate such part of the assets of the scheme as is attributable to the scheme's liabilities to provide pensions or other benefits to or in respect of the pensionable service of some or all of the members of the scheme by reference to that employer (“the segregated part”), and

(iii) a segregated part in relation to the scheme is deemed to have been created,”;

(e) in section 182(2)(b) for “in relation to the scheme” there were substituted “ in relation to the segregated part of the non-segregated scheme ”;

(f) in section 182(2)(c)(ii) after “the scheme failure notice” there were inserted “ in relation to the segregated part ”;

(g) in section 182(3)(b) after “scheme failure notice” there were inserted “ in relation to the segregated part of the non-segregated scheme ”;

(h) for paragraph (b) of section 182(4) there were substituted—

“(b) an employer in relation to the multi-employer scheme which is not divided into two or more sections (“a non-segregated scheme”) is unlikely to continue as a going concern and—

(i) the trustees or managers of the scheme have an option under the rules of the scheme, where an employer in relation to the scheme ceases to participate in the scheme, to segregate such part of the assets of the scheme as is attributable to the scheme's liabilities to provide pensions or other benefits to or in respect of the pensionable service of some or all of the members of the scheme by reference to that employer (“the segregated part”), and

(ii) a segregated part in relation to the scheme is deemed to have been created,”;

(i) in section 182(4)(c) for “the employer” there were substituted “ that employer ”;

(j) in section 182(7) for “a scheme” there were substituted “ a segregated part ”;

(k) in section 182(9)(a) and (c) for “a scheme” in each place where it occurs there were substituted “ a segregated part ”;

(l) in section 183(1) after “section 182 apply” there were inserted “ to a segregated part ”;

(m) in section 183(2)(a) and (b) after “scheme rescue” in both places where it occurs there were inserted “ in relation to a segregated part ”;

(n) after section 183(3) there were inserted—

“(3A) Where the trustees or managers with ultimate responsibility for the administration of the segregated part receive a notice from the Board under subsection (3) they must send a copy of the notice as soon as practicable to all other trustees or managers of the scheme (if different) and all of the employers in relation to the scheme.”;

(o) after section 185(5) there were added—

“(6) Where the trustees or managers with ultimate responsibility for the administration of the segregated part receive a notice from the Board under subsection (5) they must send a copy of the notice as soon as practicable to all other trustees or managers of the scheme (if different) and all of the employers in relation to the scheme.”.

(6) In this regulation—

“non-segregated scheme” means a multi-employer scheme which is not divided into two or more sections where the rules contain a segregation requirement;

“the segregation requirement” means the requirement on the trustees or managers under the scheme rules of a non-segregated scheme to segregate such part of the assets of the scheme as is attributable to the scheme's liabilities to provide pensions or other benefits to or in respect of the pensionable service of some or all of the members by reference to an employer, in relation to the scheme, where that employer ceases to participate in the scheme.