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The employer debt amending regulations: what do they do?
Practical Law UK Legal Update 2-381-0671 (Approx. 6 pages)
The employer debt amending regulations: what do they do?
by PLC Pensions
| Published on 20 Mar 2008 • England, Scotland, Wales |
On 14 March 2008, the government laid the Occupational Pension Schemes (Employer Debt and Miscellaneous Amendments) Regulations 2008 (SI 2008/731) (Amending Regulations) before Parliament. The regulations overhaul the existing employer debt regulations which deal with what employers in single and multi-employer schemes must do to meet the employer debt when severing their relationship with their pension scheme. Among other points, the Amending Regulations will amend:
- The withdrawal arrangement (WA) regime. It will now be possible to enter into WAs without the Pensions Regulator's approval if certain conditions are met. If the conditions are not met, Regulator approval will still be needed. There are also changes to the test which the Regulator uses when approving WAs.
- The definition of "employment cessation event".
- The way in which agreements to share shortfalls in multi-employer schemes between employers should operate. The aim is to stop employers from using apportionment to abandon their schemes but to allow employers to use it in genuine corporate restructurings.
- The default calculation of an employer's share of the difference between assets and liabilities. This will basically be on the buyout basis unless the employer has made other arrangements for paying the shortfall, such as under an approved WA.
The Amending Regulations also include transitional arrangements for transactions already agreed or under negotiation to use the old employer debt rules until 5 April 2009. They will come into force on 6 April 2008.