The Occupational Pension Schemes (Employer Debt) Regulations 2005

Multi-employer schemes U.K.

Multi-employer schemes: general U.K.

6.—(1) In its application to a multi-employer scheme, section 75 of the 1995 Act has effect in relation to each employer as if—

(a) the reference in section 75(2)(a) to a time which falls before any relevant event in relation to the employer which occurs while the scheme is being wound up were a reference to a time which falls before relevant events have occurred in relation to all the employers;

(b) the reference in section 75(2) to an amount equal to the difference being treated as a debt due from the employer were a reference to an amount equal to that employer's share of the difference being treated as a debt due from that employer;

(c) the references in section 75(3)(a)(i) and (b) to no relevant event of the kind there mentioned occurring in relation to the employer were references to no event of that kind occurring in relation to all the employers;

(d) the reference in section 75(4)(a) to a relevant event (“the current event”) occurring in relation to the employer were a reference to a relevant event or an employment-cessation event occurring only in relation to that employer;

(e) the reference in section 75(4) to an amount equal to the difference being treated as a debt due from the employer were—

(i) in a case where the difference is ascertained immediately before a relevant event occurs in relation to the employer, a reference to an amount equal to [F1 the sum of any unpaid expenses which were incurred by the scheme in connection with a previous employment-cessation event occurring to the employer and] the employer's share of the difference being treated as a debt due from the employer; and

(ii) in a case where the difference is ascertained immediately before an employment cessation event occurs in relation to the employer, a reference to an amount equal to the sum of the cessation expenses attributable to the employer and the employer's share of the difference being treated as a debt due from the employer; and

(f) section 75(4)(d) and (e) were omitted.

[F2 (2) For the purposes of paragraph (1), an employer's share of the difference is the liability share unless the conditions are met for it being one of the following—

(a) the scheme apportionment arrangement share;

(b) the regulated apportionment arrangement share;

(c) the withdrawal arrangement share; or

(d) the approved withdrawal arrangement share.]

[F2 (3) Where—

(a) the withdrawal arrangement share applies, the modification in regulation 6C(2) of section 75(4) of the 1995 Act shall apply when the withdrawal arrangement comes into force;

(b) the approved withdrawal arrangement share applies, the modification in regulation 7(6) of section 75(4) of the 1995 Act shall apply when the approved withdrawal arrangement comes into force.]

[F2 (4) For the purposes of calculating the liability proportion for the purposes of the liability share, the liabilities attributable to employment with any employer (“Employer A”) shall be determined by the trustees or managers, after consulting the actuary and Employer A, as follows—

(a) where a scheme apportionment arrangement (or before 6th April 2008, an exercise of a scheme apportionment rule) or a regulated apportionment arrangement has required certain liabilities to be apportioned to one or more employer in a particular way, those liabilities shall be so attributed;

[F3 (aa) where there is a restructuring within regulation 6ZB or 6ZC and regulation 6ZA(3) or (4) does not apply in relation to that restructuring, all of the liabilities in relation to the scheme which were attributable to the exiting employer shall be attributed to the receiving employer;]

[F4 (ab) where a flexible apportionment arrangement has taken effect, the liabilities to be attributed to Employer A must include the liabilities for which Employer A—

(i) has taken over responsibility under that arrangement; or

(ii) is treated for all purposes as being responsible under that arrangement;]

(b) [F5 subject to sub-paragraph (c), the liabilities to or in respect of any member which arose during or as a result of pensionable service with Employer A (including any liabilities attributable to a transfer in respect of that member received by the scheme during that period or periods of pensionable service) are attributable to Employer A; and]

(c) where any of the circumstances in paragraph (5) applies in respect of certain liabilities in respect of any member, those liabilities shall be attributable in accordance with the following sub-paragraphs applied in sequence—

(i) either—

(aa) if Employer A is the last employer of any member and the liabilities in respect of that member cannot be attributed to any employer, all of the liabilities to or in respect of any such member shall be attributable to Employer A, or

(bb) the liabilities in respect of any member which cannot be attributed to any employer shall be attributable in a reasonable manner to one or more employer (which may or may not include Employer A), or

(ii) if the trustees or managers are unable to determine whether or not Employer A is the last employer of any member and the liabilities in respect of that member cannot be attributed to any employer, the liabilities attributable to any such member shall not be attributable to any employer.

(5) The circumstances referred to in paragraph 4(c) are—

(a) where the trustees or managers are unable to determine to whom liabilities in respect of any member should be attributed in accordance with paragraph (4) (b), paragraph (4)(c) shall apply in relation to those liabilities which cannot be attributed to any employer under paragraph (4)(b); or

(b) where the trustees or managers are able to determine to whom liabilities in respect of any member should be attributed in accordance with paragraph (4)(b), but to do so they expect disproportionate costs will be incurred by the scheme, paragraph (4)(c) shall apply in relation to those liabilities which cannot be attributed to any employer under paragraph (4)(b) except at disproportionate costs.]

[F2 (6) Where an employer notifies the trustees or managers that a relevant transfer deduction shall apply to a departing employer's liabilities—

(a) the departing employer's liability share shall be reduced by the amount of the relevant transfer deduction, provided the relevant transfer liabilities and corresponding assets are transferred out during the period commencing with the applicable time and ending on the day that is 12 months later (“transfer out period”); and

(b) the liability share shall be calculated after the end of the transfer out period or if all transfers are completed on a date before the end of that period, after that date.

(7) For the purposes of paragraph (6), the relevant transfer deduction shall be determined by calculating the relevant transfer liabilities and the corresponding assets in accordance with regulation 5.

(8) The amount of the liabilities attributable to an employer under paragraph (4), the liability proportion, and the amount of the liability share shall be calculated and verified by the actuary in accordance with any relevant BAS standards and shall be certified by him in the form set out in Schedule 1 to these Regulations.]

Textual Amendments

F1 Words in reg. 6(1)(e)(i) inserted (6.4.2010) by The Occupational Pension Schemes (Employer Debt and Miscellaneous Amendments) Regulations 2010 (S.I. 2010/725), regs. 1(2), 6(2)

F2 Reg. 6(2)-(8) substituted for reg. 6(2)-(5) (6.4.2008) by The Occupational Pension Schemes (Employer Debt and Miscellaneous Amendments) Regulations 2008 (S.I. 2008/731), regs. 2(1), 6 (with reg. 2(3)-(8))

F3 Reg. 6(4)(aa) inserted (6.4.2010) by The Occupational Pension Schemes (Employer Debt and Miscellaneous Amendments) Regulations 2010 (S.I. 2010/725), regs. 1(2), 6(3)

F4 Reg. 6(4)(ab) inserted (27.1.2012) by The Occupational Pension Schemes (Employer Debt and Miscellaneous Amendments) Regulations 2011 (S.I. 2011/2973), regs. 1(2), 6(a)

F5 Reg. 6(4)(b) substituted (27.1.2012) by The Occupational Pension Schemes (Employer Debt and Miscellaneous Amendments) Regulations 2011 (S.I. 2011/2973), regs. 1(2), 6(b)

[F6 Employment-cessation events: general U.K.

6ZA.— (1) In these regulations, “employment-cessation event” means, subject to [F7 paragraphs (2) to (7)], an event which—

(a) occurs in relation to a multi-employer scheme,

(b) is not a relevant event, and

(c) subject to regulation 6A, occurs on the date on which—

(i) an employer has ceased to employ at least one person who is an active member of the scheme, and

(ii) at least one other employer who is not a defined contribution employer continues to employ at least one active member of the scheme.

(2) Subject to paragraphs (3) and (4), an employment-cessation event does not occur where there is a restructuring within regulation 6ZB or 6ZC.

(3) An employment-cessation event occurs where there is a restructuring within regulation 6ZB and within six years of that, it becomes apparent that—

(a) the exiting employer or receiving employer provided the trustees or managers with—

(i) incorrect information, or

(ii) incomplete information,

and the trustees or managers are satisfied that they would have made a different decision in step 4 in regulation 6ZB(9) if they had had the correct or complete information,

(b) step 6 has not been completed in accordance with regulation 6ZB(13) and (14), or

(c) step 7 has not been completed in accordance with regulation 6ZB(15) and (16).

(4) An employment-cessation event occurs where there is a restructuring within regulation 6ZC and within six years of that, it becomes apparent that—

(a) step 4 has not been completed in accordance with regulation 6ZC(9) and (10), or

(b) step 5 has not been completed in accordance with regulation 6ZC(11) and (12).

(5) An employment-cessation event does not occur where—

(a) there is a restructuring within regulation 6ZB or 6ZC,

(b) at any time after that, it becomes apparent that any step has not been completed in accordance with regulation 6ZB or 6ZC, and

(c) paragraphs (3) and (4) of this regulation do not apply.

(6) Where an employment-cessation event occurs in accordance with paragraph (3) or (4)—

(a) section 75(4) of the 1995 Act applies as if the amount of the debt due from the exiting employer is treated as a debt due from the exiting employer and the receiving employer jointly and severally,

(b) the date on which the employment-cessation event occurs is the date referred to in paragraph (1)(c), and

(c) for the purposes of calculating the exiting employer’s liability proportion for the purposes of the exiting employer’s liability share, the liabilities attributable to employment with the exiting employer shall be determined as if nothing had been done in relation to carrying out any of the steps in regulations 6ZB or 6ZC.

[F8 (7) An employment-cessation event does not occur in respect of the leaving employer within the meaning given in regulation 6E(7) where—

(a) the conditions in regulation 6E(2) are met, and

(b) before the end of the period of 28 days beginning with the day on which those conditions were met, an event occurs in relation to that employer which meets the requirements of sub-paragraphs (a) to (c) of paragraph (1) of this regulation.]

Textual Amendments

F6 Regs. 6ZA-6ZD inserted (6.4.2010) by The Occupational Pension Schemes (Employer Debt and Miscellaneous Amendments) Regulations 2010 (S.I. 2010/725), regs. 1(2), 7

F7 Words in reg. 6ZA(1) substituted (27.1.2012) by The Occupational Pension Schemes (Employer Debt and Miscellaneous Amendments) Regulations 2011 (S.I. 2011/2973), regs. 1(2), 7(2)

F8 Reg. 6ZA(7) inserted (27.1.2012) by The Occupational Pension Schemes (Employer Debt and Miscellaneous Amendments) Regulations 2011 (S.I. 2011/2973), regs. 1(2), 7(3)

Employment-cessation events: exemptions U.K.

6ZB.— (1)  There is a restructuring within this regulation if each of steps 1 to 6 in the following paragraphs are completed and the date on which there is a restructuring within this regulation is the date on which step 6 has been completed.

(2) Each of steps 2 to 7 can only be carried out if the previous step has been completed.

(3) Step 1 is for the exiting employer to write to the trustees or managers asking them to make a decision for the purposes of this regulation.

(4) The exiting employer decides whether and when to carry out step 1.

(5) Step 2 is for the exiting employer and receiving employer (unless the receiving employer has not yet been created) to provide any information which the trustees or managers—

(a) may request, and

(b) are satisfied is necessary to complete step 4.

(6) The trustees or managers must request any information, and the exiting employer and receiving employer must provide any information, for the purposes of completing step 2 without undue delay.

(7) Step 3 is for the trustees or managers to consult—

(a) the exiting employer about the decision to be made in step 4, and

(b) the receiving employer about the decision to be made in step 4, unless the receiving employer has not yet been created.

(8) The trustees or managers must complete step 3 without undue delay.

(9) Step 4 is for the trustees or managers to decide whether they are satisfied that the receiving employer will be at least as likely—

(a) as the exiting employer to meet all the exiting employer’s liabilities in relation to the scheme, and

(b) to meet any liabilities in relation to the scheme which the receiving employer has immediately before step 6 is carried out.

(10) The trustees or managers must—

(a) complete step 4 without undue delay, and

(b) consider, when carrying out step 4, factors including, but not limited to, any material change in legal, demographic or economic circumstances, as described in regulation 5(4)(d) of the Scheme Funding Regulations, that would justify a change to the method or assumptions used on the last occasion on which the scheme’s technical provisions were calculated.

(11) Step 5 is for the trustees or managers to send—

(a) the exiting employer, and

(b) the receiving employer, unless the receiving employer has not yet been created,

their decision in step 4, and the reasons for that decision, in writing.

(12) The trustees or managers must complete step 5 without undue delay.

(13) Step 6 is for—

(a) the receiving employer to take over responsibility, under a legally enforceable agreement, for all of the exiting employer’s—

(i) assets,

(ii) employees, and

(iii) scheme members, and

(b) all of the exiting employer’s liabilities in relation to the scheme to be—

(i) taken over by the receiving employer under a legally enforceable agreement so that the receiving employer is responsible for them, or

(ii) where it is impossible for the receiving employer to take over the exiting employer’s liabilities in relation to the scheme under a legally enforceable agreement, treated for all purposes as being the responsibility of the receiving employer.

(14) The receiving employer decides whether to carry out step 6, but the receiving employer can only carry out step 6—

(a) where the trustees or managers decided in step 4 that they are satisfied,

(b) where the trustees or managers are satisfied that there has been no change which would alter that decision in step 4, and

(c) within the 18 weeks, or such longer period up to a total of 36 weeks as the trustees or managers may choose, after the date of the written decision in step 5.

(15) Step 7 is for the receiving employer and exiting employer to send the trustees or managers written confirmation—

(a) that step 6 has been completed, and

(b) of the date on which step 6 was completed.

(16) The receiving employer and exiting employer must complete step 7 without undue delay.

(17) In this regulation, liabilities in relation to the scheme means all such liabilities including, but not limited to, any—

(a) liabilities which—

(i) have accrued to or in respect of scheme members, and

(ii) are attributable to the employer under regulation 6(4),

(b) amounts treated as a debt due to the trustees or managers of the scheme, including such debts due in accordance with section 75 of the 1995 Act,

(c) liabilities or amounts which have been apportioned to the employer in—

(i) a scheme apportionment arrangement,

(ii) an exercise of a scheme apportionment rule before 6th April 2008, or

(iii) a regulated apportionment arrangement,

(d) liabilities which were attributed to the employer as part of a previous restructuring within this regulation or regulation 6ZC,

(e) amount for which the employer is a guarantor under a withdrawal arrangement or an approved withdrawal arrangement,

(f) payments which are due to be made by the employer under—

(i) the schedule of contributions, or

(ii) any recovery plan, F9 ...

(g) liability share of the employer.

[F10 (h) liabilities for which the employer—

(i) has taken over responsibility under a flexible apportionment arrangement, or

(ii) is treated for all purposes as being responsible under such an arrangement, and

(i) actual and contingent liabilities.]

Textual Amendments

F6 Regs. 6ZA-6ZD inserted (6.4.2010) by The Occupational Pension Schemes (Employer Debt and Miscellaneous Amendments) Regulations 2010 (S.I. 2010/725), regs. 1(2), 7

F9 Word in reg. 6ZB(17)(f) omitted (27.1.2012) by virtue of The Occupational Pension Schemes (Employer Debt and Miscellaneous Amendments) Regulations 2011 (S.I. 2011/2973), regs. 1(2), 8(a)

F10 Reg. 6ZB(17)(h)(i) inserted (27.1.2012) by The Occupational Pension Schemes (Employer Debt and Miscellaneous Amendments) Regulations 2011 (S.I. 2011/2973), regs. 1(2), 8(b)

6ZC.— (1) There is a restructuring within this regulation if each of steps 1 to 4 in the following paragraphs are completed and the date on which there is a restructuring within this regulation is the date on which step 4 has been completed.

(2) Each of steps 2 to 5 can only be carried out if the previous step has been completed.

(3) Step 1 is for the exiting employer to write to the trustees or managers asking them to make a decision for the purposes of this regulation.

(4) The exiting employer decides whether and when to carry out step 1.

(5) Step 2 is for the trustees or managers to decide whether they are satisfied that the following four conditions are met—

(a) the assets of the scheme are at least equal to the protected liabilities of the scheme,

(b) either—

(i) there are only one or two relevant members, or

(ii) no more than 3% of the total number of scheme members in respect of whom defined benefits have accrued are relevant members,

(c) the annual amount of accrued pension in respect of the relevant members does not exceed the maximum amount where—

(i) the annual amount of accrued pension includes pensions in payment and pensions not in payment,

(ii) the annual amount of accrued pensions in payment means the most recent payment of pension to each relevant member multiplied to produce an estimated annual amount,

(iii) the annual amount of accrued pensions not in payment means the annual amount of pension to which each relevant member has accrued rights, and

(iv) the maximum amount means—

(aa) in the year commencing on 6th April 2010, £20,000, and

(bb) in any subsequent year, £20,000 plus £500 for each year after the year commencing on 6th April 2010, and

(d) if any restructurings within this regulation in relation to the scheme have occurred in the three years before step 4 is completed, those restructurings and the restructuring which occurs when step 4 is completed involve a combined total of—

(i) no more than—

(aa) five scheme members in respect of whom defined benefits have accrued, or

(bb) 7.5% of the total number of scheme members in respect of whom defined benefits have accrued,

whichever is the higher, and

(ii) no more than £50,000 of the annual amount of accrued pension as calculated for the purposes of sub-paragraph (c).

(6) The trustees or managers must complete step 2—

(a) without undue delay, and

(b) using the figures contained in the most recent—

(i) actuarial valuation under section 179 of the 2004 Act (valuations to determine scheme underfunding) for the assets and protected liabilities of the scheme, and

(ii) scheme return within the meaning in section 65(2) of the 2004 Act (scheme returns: supplementary) for the number of members of the scheme.

(7) Step 3 is for the trustees or managers to send—

(a) the exiting employer, and

(b) the receiving employer, unless the receiving employer has not yet been created,

their decision in step 2 in writing.

(8) The trustees or managers must complete step 3 without undue delay.

(9) Step 4 is for—

(a) the receiving employer to take over responsibility, under a legally enforceable agreement, for all of the exiting employer’s—

(i) assets,

(ii) employees, and

(iii) scheme members, and

(b) all of the exiting employer’s liabilities in relation to the scheme (as defined in regulation 6ZB(17)) to be—

(i) taken over by the receiving employer under a legally enforceable agreement so that the receiving employer is responsible for them, or

(ii) where it is impossible for the receiving employer to take over the exiting employer’s liabilities in relation to the scheme under a legally enforceable agreement, treated for all purposes as being the responsibility of the receiving employer.

(10) The receiving employer decides whether to carry out step 4, but the receiving employer can only carry out step 4—

(a) where the trustees or managers decided in step 2 that they are satisfied, and

(b) within the 18 weeks, or such longer period up to a total of 36 weeks as the trustees or managers may choose, of the date of the written decision in step 3.

(11) Step 5 is for the receiving employer and exiting employer to send the trustees or managers written confirmation—

(a) that step 4 has been completed, and

(b) of the date on which step 4 was completed.

(12) The receiving employer and exiting employer must complete step 5 without undue delay.

(13) In this regulation, “relevant members” means scheme members in respect of whom defined benefits accrued as a result of pensionable service with the exiting employer.

Textual Amendments

F6 Regs. 6ZA-6ZD inserted (6.4.2010) by The Occupational Pension Schemes (Employer Debt and Miscellaneous Amendments) Regulations 2010 (S.I. 2010/725), regs. 1(2), 7

6ZD.— (1) The trustees or managers may decide that any costs incurred by them as a result of the steps in regulation 6ZB or 6ZC are to be met by the exiting employer, the receiving employer or both.

(2) The trustees or managers may make a decision under paragraph (1)—

(a) at any time during the steps in regulation 6ZB or 6ZC, or

(b) within one month after the final step in either of those regulations is completed.

(3) Where the trustees or managers make such a decision—

(a) they must write to the exiting employer, the receiving employer or both (as the case may be) with details of their costs, and

(b) the exiting employer, the receiving employer or both (as the case may be) must pay those costs.]

Textual Amendments

F6 Regs. 6ZA-6ZD inserted (6.4.2010) by The Occupational Pension Schemes (Employer Debt and Miscellaneous Amendments) Regulations 2010 (S.I. 2010/725), regs. 1(2), 7

[F11 Employment-cessation events: periods of grace U.K.

6A.— (1) Where but for this regulation an employment-cessation event would have occurred in relation to an employer (“A”) and before, on, or [F12 within 2 months] after, the cessation date A gives the trustees or managers of a relevant scheme (“the scheme”) a period of grace notice, A will be treated for a period of grace as if he employed a person who is an active member of the scheme, but—

(a) if by the last day of the period of grace A does not employ a person who is an active member of the scheme, A will be treated as if the period of grace had not applied;

(b) if at any time during the period of grace A no longer intends to employ any person who will be an active member of the scheme, A must notify the trustees or managers of the scheme and A will be treated as if the period of grace had not applied;

(c) if at any time during the period of grace A employs an active member (whether before or after giving the period of grace notice), A will be treated as if an employment-cessation event had not occurred in relation to him on the cessation date which applied to the period of grace notice; or

(d) if during the period of grace an insolvency event occurs in relation to A, A will be treated as if the period of grace had not applied.

(2) Where in accordance with paragraph (1) an employer is treated for the period of grace as if he employed at least one person who is an active member of the scheme, he will for the purposes of these Regulations be treated during that period as if he were an employer in relation to the scheme.

(3) For the purposes of this regulation, the following definitions shall apply—

“cessation date” means the date on which the employer ceases to employ at least one person who is an active member of the scheme and at least one other person who is not a defined contribution employer continues to employ at least one person who is an active member of the scheme;

“relevant scheme” means a scheme in relation to which A is not aware of any intention for it to become a frozen scheme during the period of grace;

“period of grace” means a period commencing on the cessation date and ending on the earlier of—

(a)

[F13 the day referred to in paragraph (4), or]

(b)

the day on which the employer employs a person who is an active member of the scheme;

“period of grace notice” means a notice in writing that an employer intends during the period of grace to employ at least one person who will be an active member of the scheme.

[F14 (4) The day mentioned in paragraph (a) of the definition of “period of grace” in paragraph (3) is—

(a) the day which is 12 months after the cessation date; or

(b) a day which—

(i) is more than 12 months after the cessation date;

(ii) is less than 36 months after the cessation date; and

(iii) the trustees or managers of the scheme choose to nominate in accordance with paragraph (5).

(5) A nomination mentioned in paragraph (4)(b)(iii) may only be made—

(a) in writing; and

(b) before—

(i) the end of 12 months after the cessation date, where no day has previously been nominated under paragraph (4)(b)(iii); or

(ii) the day previously nominated under paragraph (4)(b)(iii).]

Textual Amendments

F11 Regs. 6A-6D inserted (6.4.2008) by The Occupational Pension Schemes (Employer Debt and Miscellaneous Amendments) Regulations 2008 (S.I. 2008/731), regs. 2(1), 7 (with reg. 2(3)-(8))

F12 Words in reg. 6A(1) substituted (27.1.2012) by The Occupational Pension Schemes (Employer Debt and Miscellaneous Amendments) Regulations 2011 (S.I. 2011/2973), regs. 1(2), 9(2)

F13 Words in reg. 6A(3) substituted (27.1.2012) by The Occupational Pension Schemes (Employer Debt and Miscellaneous Amendments) Regulations 2011 (S.I. 2011/2973), regs. 1(2), 9(3)

F14 Reg. 6A(4)(5) inserted (27.1.2012) by The Occupational Pension Schemes (Employer Debt and Miscellaneous Amendments) Regulations 2011 (S.I. 2011/2973), regs. 1(2), 9(4)

Scheme apportionment arrangements U.K.

6B.— (1) Before the trustees or managers of the scheme enter into a scheme apportionment arrangement, the funding test must be met in relation to it.

[F15 (2) Paragraph (1) does not apply where paragraph (3) or (4) applies.]

[F16 (3) This paragraph applies where—

(a) the employer’s scheme apportionment arrangement share will be higher than the liability share, and

(b) the trustees or managers are satisfied that the employer is able to pay the scheme apportionment arrangement share.

(4) This paragraph applies where—

(a) the scheme has commenced winding-up by the date the scheme apportionment arrangement is entered into,

(b) the employer’s scheme apportionment arrangement share will be lower than that employer’s liability share,

(c) the trustees or managers are satisfied that it is likely that the employer—

(i) will be able to pay the scheme apportionment arrangement share, and

(ii) would have been unable to pay the liability share if it applied,

(d) the trustees or managers are satisfied that it is likely that any of the employers who—

(i) are remaining in the scheme, and

(ii) are not defined contribution employers,

will be able to pay any amount by which the employer’s scheme apportionment arrangement share will be less than the employer’s liability share,

(e) the scheme is not in an assessment period, and

(f) the trustees or managers are satisfied that an assessment period is unlikely to begin in relation to the scheme within the following 12 months.]

Textual Amendments

F11 Regs. 6A-6D inserted (6.4.2008) by The Occupational Pension Schemes (Employer Debt and Miscellaneous Amendments) Regulations 2008 (S.I. 2008/731), regs. 2(1), 7 (with reg. 2(3)-(8))

F15 Reg. 6B(2) substituted (6.4.2010) by The Occupational Pension Schemes (Employer Debt and Miscellaneous Amendments) Regulations 2010 (S.I. 2010/725), regs. 1(2), 8(2)

F16 Regs. 6B(3)-(4) inserted (6.4.2010) by The Occupational Pension Schemes (Employer Debt and Miscellaneous Amendments) Regulations 2010 (S.I. 2010/725), regs. 1(2), 8(3)

Withdrawal Arrangements U.K.

6C.— (1) The trustees or managers may enter into a withdrawal arrangement, before, on or after the applicable time (which applies to an employment-cessation event), provided that—

(a) the funding test is met, and

(b) they are satisfied that at the date of the agreement, the guarantors have sufficient financial resources to be likely to be able to pay amount B that would arise on that date (or pay the likely amount B).

(2) [F17 Where a] withdrawal arrangement comes into force—

(a) the cessation employer's share of the difference shall for the purposes of regulation 6(2) be the withdrawal arrangement share, and

[F18 (b) section 75(4) of the 1995 Act shall apply as if amount B is treated as a debt due from the guarantors at the guarantee time for which (if there is more than one guarantor) they are jointly liable or, if the withdrawal arrangement so provides, jointly and severally liable.]

(3) A relevant transfer deduction will apply to a withdrawal arrangement share provided any transfer or transfers of the cessation employer's relevant transfer liabilities and corresponding assets are completed on or before the date which is twelve months after the employment-cessation event.

(4) Schedule 1A makes further provision in relation to withdrawal arrangements.

Textual Amendments

F11 Regs. 6A-6D inserted (6.4.2008) by The Occupational Pension Schemes (Employer Debt and Miscellaneous Amendments) Regulations 2008 (S.I. 2008/731), regs. 2(1), 7 (with reg. 2(3)-(8))

F17 Words in reg. 6C(2) substituted (6.4.2010) by The Occupational Pension Schemes (Employer Debt and Miscellaneous Amendments) Regulations 2010 (S.I. 2010/725), regs. 1(2), 9(a)

F18 Reg. 6C(2)(b) substituted (6.4.2010) by The Occupational Pension Schemes (Employer Debt and Miscellaneous Amendments) Regulations 2010 (S.I. 2010/725), regs. 1(2), 9(b)

Notifiable events U.K.

6D.   Schedule 1B applies for the purposes of section 69(2)(a) and (3)(a) of the 2004 Act so as to require notice of the events prescribed in that Schedule to be given to the Authority by the persons prescribed in relation to those events, unless the Authority direct otherwise.]

Textual Amendments

F11 Regs. 6A-6D inserted (6.4.2008) by The Occupational Pension Schemes (Employer Debt and Miscellaneous Amendments) Regulations 2008 (S.I. 2008/731), regs. 2(1), 7 (with reg. 2(3)-(8))

[F19 Flexible apportionment arrangements U.K.

6E.— (1) A flexible apportionment arrangement takes effect on the date on which both—

(a) the conditions in paragraph (2) are met; and

(b) an employment-cessation event—

(i) has occurred in relation to the leaving employer before the date on which the conditions in paragraph (2) are met;

(ii) would have occurred in relation to the leaving employer if regulation 6ZA(7) had not applied; or

(iii) would have occurred in relation to the leaving employer if the scheme had not become a frozen scheme.

(2) The conditions are that—

(a) subject to paragraph (4), the funding test is met;

(b) one or more replacement employers—

(i) take over responsibility under a legally enforceable agreement for all the liabilities in relation to the scheme (within the meaning given in regulation 6ZB(17)) of the leaving employer as those liabilities stand immediately before the flexible apportionment arrangement takes effect, taking into account any reduction mentioned in paragraph (5)(c); or

(ii) where it is impossible for the replacement employer(s) to take over responsibility for those liabilities under a legally enforceable agreement, are treated for all purposes as being responsible for those liabilities;

(c) the following persons consent in writing—

(i) the trustees or managers of the scheme;

(ii) the leaving employer; and

(iii) all the replacement employers referred to in sub-paragraph (b);

(d) the leaving employer is not in a period of grace in accordance with regulation 6A;

(e) the requirements set out in paragraph (5) are met for any payment of any part of a debt—

(i) due as a result of the employment-cessation event referred to in paragraph (1)(b)(i); or

(ii) that would have been due as a result of the employment-cessation event referred to in paragraph (1)(b)(ii) that would have occurred if regulation 6ZA(7) had not applied;

(f) the scheme is not—

(i) in an assessment period; or

(ii) being wound up; and

(g) the trustees or managers of the scheme are satisfied that an assessment period is unlikely to begin in relation to the scheme within the period of 12 months beginning with the date on which a flexible apportionment arrangement takes effect.

(3) Where a flexible apportionment arrangement takes effect in accordance with paragraph (1)(b)(i), section 75(4) of the 1995 Act is modified so that no amount is to be treated as a debt due to the trustees or managers of the scheme as a result of the employment-cessation event.

(4) The funding test does not have to be met where—

(a) the funding test is met for a different flexible apportionment arrangement;

(b) the time when the flexible apportionment arrangement takes effect is or will be, in the opinion of the trustees or managers of the scheme, the same as or similar to the time when the different flexible apportionment arrangement takes effect; and

(c) the trustees or managers of the scheme are satisfied that the funding test would be met if it was carried out again.

(5) The requirements referred to in paragraph (2)(e) are—

(a) the payment (which in this paragraph means the payment referred to in paragraph (2)(e)) is made to the trustees or managers of the scheme by or on behalf of the leaving employer;

(b) the payment is in addition to any amount that is required to be paid under the schedule of contributions;

(c) the trustees or managers of the scheme decide to make a reduction of the liabilities in relation to the scheme (within the meaning given in regulation 6ZB(17)) of the leaving employer as a result of the payment; and

(d) the reduction of those liabilities relates to the amount of the payment.

(6) The trustees or managers of the scheme may require the leaving employer or the replacement employers (or both) to pay all or part of the costs which the trustees or managers of the scheme have incurred by virtue of this regulation.

(7) In this regulation—

“the leaving employer” means an employer—

(a)

in relation to a multi-employer scheme;

(b)

in respect of whom a relevant event has not occurred; and

(c)

who—

(i)

employs at least one active member of the scheme in respect of whom defined benefits are accruing; or

(ii)

used to employ at least one such active member;

“replacement employer” means an employer who, on the date on which the flexible apportionment arrangement takes effect—

(a)

is an employer in relation to the same multi-employer scheme as the leaving employer;

(b)

either—

(i)

is employing at least one active member of the scheme in respect of whom defined benefits are accruing; or

(ii)

used to employ at least one such active member and no amount was treated as a debt due to the trustees or managers of the scheme when the last such active member ceased to be employed; and

(c)

is an employer in respect of whom a relevant event has not occurred.]

Textual Amendments

F19 Reg. 6E inserted (27.1.2012) by The Occupational Pension Schemes (Employer Debt and Miscellaneous Amendments) Regulations 2011 (S.I. 2011/2973), regs. 1(2), 10

[F20 Approved withdrawal arrangements U.K.

7.— (1) If a cessation employer notifies the Authority in writing that he proposes to enter into an arrangement under this regulation and proposes to seek the Authority's approval of the arrangement, the Authority may issue directions that—

(a) a debt which may be treated as due under section 75(4) of the 1995 Act is to be unenforceable for such period (“suspension period”) as the Authority may specify in the direction;

(b) the suspension period is to be extended by such further periods as it specifies; and

(c) if an approved withdrawal arrangement comes into force before the end of the suspension period, section 75(4) of the 1995 Act is to apply with the modifications in paragraph (6).

(2) The Authority may not approve an arrangement under this regulation unless—

(a) the amount the cessation employer proposes to pay as its approved withdrawal arrangement share is less than amount A,

(b) the trustees have notified the Authority that the funding test is met, and

(c) the Authority are satisfied that it is reasonable to do so having regard to such matters as the Authority consider relevant, which may include the following—

(i) the potential effect of the employment-cessation event on the method or assumptions used to calculate the scheme's technical provisions;

(ii) the financial circumstances of the proposed guarantors;

(iii) the amount of the cessation employer's share of the difference under the liability share;

(iv) the amount the cessation employer proposes to pay as its approved withdrawal arrangement share (and, where there is likely to be a relevant transfer deduction, an estimate of the amount that the cessation employer will pay if the transfer is completed); and

(v) the effect of the proposed arrangement on the security of members' benefits under the scheme.

(3) Approval by the Authority of an arrangement—

(a) may be given subject to such conditions as the Authority consider appropriate; and

(b) is to be given in a notice issued by the Authority.

(4) An arrangement may be approved by the Authority in advance of an employment-cessation event occurring (see paragraph 6 of Schedule 1A) or following the occurrence of such an event.

(5) An arrangement may be approved by the Authority where a departing employer notifies the trustees that a relevant transfer deduction shall apply to the proposed approved withdrawal arrangement share, but such approval will cease to be effective if the transfer or transfers of the cessation employer's liabilities are not completed on or before the date which is twelve months after the employment-cessation event or within such a longer period as the Authority approve.

(6) If the Authority issue the directions referred to in paragraph (1) and an approved withdrawal arrangement comes into force before the end of the suspension period (referred to in that paragraph)—

(a) the cessation employer's share of the difference shall for the purposes of regulation 6(2) be the approved withdrawal arrangement share, and

(b) section 75(4) of the 1995 Act shall apply as if amount B is treated as a debt due from the guarantors at the guarantee time for which (if there is more than one guarantor) they are jointly, or if the approved withdrawal arrangement provides, jointly and severally liable.

(7) The Authority may issue a direction that amount B under an approved withdrawal arrangement is not to be treated as a debt due from the guarantors under section 75(4) of the 1995 Act and any such direction must be issued—

(a) before the guarantee time, and

(b) if the Authority consider that the approved withdrawal arrangement is no longer required.

(8) The Authority may issue a notice that they consider amount B (or the balance remaining) under an approved withdrawal arrangement should be paid but they may not issue such a notice unless they consider that it is reasonable for the guarantors to be required to pay that amount at that time.

(9) In forming an opinion for the purposes of paragraph (8), the Authority must have regard to such matters as the Authority consider relevant including—

(a) whether the guarantors have taken reasonable steps to comply with the approved withdrawal arrangement;

(b) whether the guarantors have complied with their obligations under Schedule 1B (notifiable events); and

(c) the guarantors' financial circumstances.

(10) Where the Authority consider that an arrangement no longer requires to be continued in force, they may issue a notice to the parties to that effect.

(11) Schedule 1A makes further provision in relation to approved withdrawal arrangements.]

Textual Amendments

F20 Regs. 7 7A substituted for reg. 7 (6.4.2008) by The Occupational Pension Schemes (Employer Debt and Miscellaneous Amendments) Regulations 2008 (S.I. 2008/731), regs. 2(1), 8 (with reg. 2(3)-(8))

[F20 Regulated apportionment arrangements U.K.

7A.— (1) The conditions which apply to a regulated apportionment arrangement are as follows—

(a) the arrangement applies to a trust scheme where—

(i) the trustees are of the opinion that there is a reasonable likelihood of an assessment period commencing in relation to the scheme within the following twelve months; or

(ii) an assessment period has already commenced in relation to the scheme and has not come to an end;

(b) [F21 where an assessment period has not already commenced, each of the following persons agrees to the arrangement—

(i) the trustees of the scheme, and either

(ii) where the employer’s liability share is increased, the employer, or

(iii) where the employer’s liability share is reduced, any remaining employer to whom all or part of the amount that would have been the employer’s liability share is being apportioned;]

(c) the arrangement and any amendments to the arrangement are approved by the Authority by a notice of approval; and

(d) the Board of the PPF do not object to the arrangement.

(2) A notice of approval is a confirmation, issued by the Authority, that in their opinion in the circumstances described in the application it would be reasonable to issue a notice of approval.

Textual Amendments

F20 Regs. 7 7A substituted for reg. 7 (6.4.2008) by The Occupational Pension Schemes (Employer Debt and Miscellaneous Amendments) Regulations 2008 (S.I. 2008/731), regs. 2(1), 8 (with reg. 2(3)-(8))

F21 Reg. 7A(1)(b) substituted (15.4.2008) by The Occupational Pension Schemes (Employer Debt “ Apportionment Arrangements) (Amendment) Regulations 2008 (S.I. 2008/1068), regs. 1, 2(3)

Calculation of amounts due from guarantors by virtue of regulation 7 U.K.

7B.— (1) For the purposes of regulation 7(3), amount B depends on whether the approved withdrawal arrangement provides for amount B to be the amount provided for under paragraph (2).

(2) If the approved withdrawal arrangement so provides, amount B is equal to the amount (if any) that would be the amount of the debt due from the cessation employer under section 75(4) of the 1995 Act if—

(a) the employment-cessation event had occurred at the guarantee time;

(b) the cessation employer had not entered into an approved withdrawal arrangement; and

(c) there were no cessation expenses attributable to the employer.

(3) If the approved withdrawal arrangement does not provide for amount B to be the amount provided for under paragraph (2), amount B is equal to the amount that would be the amount treated as due from the cessation employer under section 75(4) of the 1995 Act if the cessation employer had not entered into an approved withdrawal arrangement, less the sum of—

(a) the amount that is amount A for the purposes of regulation 7(3);

(b) if the amount that the approved withdrawal arrangement provides for the cessation employer to pay exceeds that amount, an amount equal to the excess; and

(c) the relevant transferred liabilities deduction.

(4) The value of the assets and the amount of the liabilities of a scheme which are to be taken into account for the purposes of determining the amount (if any) that would be the amount of the debt due from the cessation employer under section 75(4) of the 1995 Act in the case mentioned in paragraph (2) must be certified by the actuary in the form set out in Schedule 1 to these Regulations, but—

(a) substituting for the reference to regulation 5 a reference to paragraph (2) of this regulation;

(b) if the actuary is of the opinion that the value of the assets of the scheme was not less than the amount of the liabilities of the scheme—

(i) substituting in the first sentence of the comparison of value of scheme assets with amount of scheme liabilities for the words “was less” the words “was not less”; and

(ii) omitting the last sentence of that comparison; and

(c) if the scheme is being wound up on the date as at which the valuation is made, omitting from the Note the words from “if the scheme” onwards.

(5) In this regulation—

“the cessation expenses attributable to the employer” has the meaning given by regulation 6(5); and

“the relevant transferred liabilities deduction” has the meaning given by regulation 6(6), as inserted by the modification of regulation 6 made by regulation 7A(5)(b), except that for the purposes of this regulation the amount of the relevant transferred liabilities is to be calculated in accordance with regulation 5 without the modifications made by regulation 7A(4).]

Textual Amendments

F20 Regs. 7 7A substituted for reg. 7 (6.4.2008) by The Occupational Pension Schemes (Employer Debt and Miscellaneous Amendments) Regulations 2008 (S.I. 2008/731), regs. 2(1), 8 (with reg. 2(3)-(8))

[F22 Single employer sections, multi-employer sections, etc U.K.

8.— (1) Where section 75 of the 1995 Act and these Regulations (apart from this regulation) apply to a scheme in relation to which there is more than one employer they shall apply to each of the following sections or parts of that scheme as if the section or part were a separate scheme—

(a) a section of a segregated scheme with one employer in relation to the section;

(b) a section of a segregated scheme with more than one employer in relation to the section;

(c) a death benefits section of a segregated scheme;

(d) a frozen section of a segregated scheme.

(2) For the purposes of paragraph (1)—

(a) subject to sub-paragraph (b), a “segregated scheme” means a scheme in relation to which there is more than one employer and which is divided into two or more sections where—

(i) any contributions payable to the scheme by an employer in relation to the scheme or by a member are allocated to that employer's section, if more than one section applies to an employer to the section to which the employment relates, and any contributions to that employer's or member's section; and

(ii) a specified proportion of the assets of the scheme is attributable to each section of the scheme and cannot be used for the purposes of any other section;

(b) when determining whether a scheme is a segregated scheme there shall (for that purpose) be disregarded any provisions of the scheme which—

(i) permit contributions or transfers of assets to be used to provide death benefits;

(ii) permit any assets of a section of a scheme to be used for the purpose of another section in the event of the winding-up of the scheme or a section;

(c) a “death benefits section of a segregated scheme” shall mean a section—

(i) which provides death benefits only; and

(ii) to which contributions or transfers of assets may only be made for the purpose of providing death benefits;

(d) a “frozen section of a segregated scheme” shall mean a section—

(i) which applies only to members who are no longer in pensionable service in relation to the section (and a period of grace notice has not been given under regulation 6A and a period of grace under that regulation is not in progress); and

(ii) where the scheme rules have not been amended to prevent the scheme from otherwise being a segregated scheme.]

Textual Amendments

F22 Reg. 8 substituted (6.4.2008) by The Occupational Pension Schemes (Employer Debt and Miscellaneous Amendments) Regulations 2008 (S.I. 2008/731), regs. 2(1), 9 (with reg. 2(3)-(8))