The Pensions Regulator

Multi-employer withdrawal arrangementsMulti-employer withdrawal arrangements

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Payment of statutory debts in multi-employer schemes
Withdrawal arrangements and apportionments
Apportionment arrangements
Weighing up the options
Definitions

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Payment of statutory debts in multi-employer schemes

During the life of a scheme the 'statutory funding objective' must be met. This means that the scheme must have sufficient and appropriate assets to cover its technical provisions. Technical provisions are an estimate, based on actuarial principles, of the assets needed to cover the scheme's liabilities.

When an employer in a defined benefit multi-employer occupational pension scheme has an employment-cessation event then, if the scheme is in deficit on a full buy-out basis (the level an actuary judges appropriate to buy out benefits through the annuities market), that employer becomes liable for a debt. This statutory debt is often referred to as the section 75 debt.

The Occupational Pension Schemes (Employer Debt and Miscellaneous Amendments) Regulations 2008 (referred to below as the '2008 regulations') came into force on 6 April 2008. These regulations introduce a number of changes to the provisions which deal with the way in which employer debts are met in multi-employer schemes, in particular with the introduction of four options for employers under which an employer may pay a reduced modified debt.

We are working on guidance materials to help trustees, employers and advisers to be available in the coming months. In the meantime please find on the following pages a brief overview of some of the key messages to be included in our guidance.

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