Regulation 15
SCHEDULE 3 Amendment of the Employer Debt Regulations
For Schedule 1B to the Employer Debt Regulations substitute the following—
Regulation 6D
“SCHEDULE 1B Notifiable Events
1.—(1) Where a withdrawal arrangement or an approved withdrawal arrangement is in force in relation to a scheme, each of the guarantors must give notice to the Authority if such an event as is mentioned in sub-paragraph (2) occurs in relation to that person.
(2) The events referred to in sub-paragraph (1) are—
(a) any decision by the relevant person to take action which will, or is intended to, result in a debt which is or may become due—
(i) to the trustees of the scheme, or
(ii) if the Board of the PPF has assumed responsibility for the scheme in accordance with Chapter 3 of Part 2 of the 2004 Act, to the Board,
not being paid in full;
(b) a decision by the relevant person to cease to carry on business (including any trade or profession) in the United Kingdom or, if the relevant person ceases to carry on such business without taking such a decision, his doing so;
(c) where applicable, receipt by the relevant person of advice that the person is trading wrongfully within the meaning of section 214 of the Insolvency Act 1986 (wrongful trading), or circumstances occurring in which a director or former director of the company knows that there is no reasonable prospect that the company will avoid going into insolvent liquidation within the meaning of that section, and for this purpose section 214(4) of that Act applies;
(d) any breach by the relevant person of a covenant in an agreement between the relevant person and a bank or other institution providing banking services, other than where the bank or other institution agrees with the relevant person not to enforce the covenant;
(e) any change in the relevant person’s credit rating, or the relevant person ceasing to have a credit rating;
(f) where the relevant person is a company, a decision by a controlling company to relinquish control of the relevant person or, if the controlling company relinquishes such control without taking such a decision, its doing so;
(g) two or more changes in the holders of any key relevant person posts within a period of 12 months;
(h) where the relevant person is a company or partnership, the conviction of an individual, in any jurisdiction, for an offence involving dishonesty, if the offence was committed while the individual was a director or partner of the relevant person;
(i) an insolvency event occurring in relation to the relevant person for the purposes of Part 2 of the 2004 Act (see section 121 of that Act: insolvency event, insolvency date and insolvency practitioner).
(3) A notice under sub-paragraph (1) must be given in writing as soon as reasonably practicable after the relevant person becomes aware of the event.
(4) In this paragraph—
“control” has the meaning given in section 435(10) of the Insolvency Act 1986 (meaning of “associate” - meaning of “control”) and “controlling company” is to be read accordingly;
“director” has the meaning given in section 741(1) of the Companies Act 1985 (meaning of “director” and “shadow director”);
“key relevant person posts” means the Chief Executive and any director or partner responsible in whole or in part for the financial affairs of the relevant person.
2.—(1) The trustees or managers of a scheme must give notice to the Authority of any decision by them to take action which will, or is intended to, result in any entering into a scheme apportionment arrangement on or after the applicable time.
(2) A notice under sub-paragraph (1) must be given in writing as soon as reasonably practicable after the making of the decision.
3.—(1) No duty to which a person is subject under paragraph 1 or 2 is to be regarded as contravened merely because of any information or opinion contained in a notice under paragraph 1 or 2.
(2) But sub-paragraph (1) does not require any person to disclose protected items within the meaning of section 311 of the 2004 Act (protected items).
(3) Section 10 of the 1995 Act (civil penalties) applies to any person who without reasonable excuse fails to comply with an obligation imposed on him under paragraph 1 or 2.
paragraph 2(a) of Schedule 1A
SCHEDULE 1C Actuary’s Certificate for Withdrawal Arrangement Share or Approved Withdrawal Arrangement Share in Multi-Employer Scheme
Given for the purposes of paragraph 2(a) of Schedule 1A to the Occupational Pension Schemes (Employer Debt) Regulations 2005 (“the Employer Debt Regulations”)
paragraph 2(b) and (c)of Schedule 1A
SCHEDULE 1D Actuary’s Certificate for Amount B under a Withdrawal Arrangement or an Approved Withdrawal Arrangement in a Multi-Employer Scheme
Given for the purposes of sub-paragraph (b) or (c) of paragraph 2 of Schedule 1A to the Occupational Pension Schemes (Employer Debt) Regulations 2005 (“the Employer Debt Regulations”)
EXPLANATORY NOTE
(This note is not part of the Regulations)
These Regulations amend the Occupational Pension Schemes (Employer Debt) Regulations 2005 (S.I. 2005/678) (“the 2005 Regulations”). The 2005 Regulations make provision where debts arise under section 75 of the Pensions Act 1995 (c.26) (“the 1995 Act”) in respect of occupational pension schemes.
Under Regulation 2, the Regulations come into force on 6th April 2008, subject to transitional provisions under which certain provisions of the existing 2005 Regulations are to remain applicable in specified circumstances after that date.
Regulation 3 provides that the 2005 Regulations are to be amended in accordance with regulations 4 to 15.
Regulation 4 amends the interpretation provisions of the 2005 Regulations.
Regulation 5 substitutes new provisions for regulation 5 of the 2005 Regulations. These provide for the determination and valuation of the assets and liabilities of a scheme for the purposes of section 75 of the 1995 Act. Liabilities in respect of pensions and other benefits continue to be valued on the basis that the trustees or managers will provide for them by buying annuities. Liabilities are to be certified by the scheme’s actuary in accordance with Schedule 1 to the 2005 Regulations, which is also amended.
Regulations 6 to 9 deal with multi-employer schemes.
Regulation 6 amends regulation 6 of the 2005 Regulations, which makes general provision in respect of multi-employer schemes.
Regulation 7 inserts new regulations 6A, 6B, 6C and 6D in the 2005 Regulations.
New regulation 6A provides for a period of grace of up to 12 months where a cessation event would otherwise have occurred because an employer ceases to employ a person who is an active member of a scheme.
New regulation 6B enables the trustees or managers of a scheme to enter into a scheme apportionment arrangement, under which an employer may pay an amount lower than his liability under section 75 of the 1995 Act provided that a funding test is met.
New regulation 6C sets out the conditions under which trustees or managers may enter into a withdrawal arrangement with a cessation employer. These include a funding test being met and the trustees being satisfied that guarantors are likely to be able to pay an amount calculated in accordance with Schedule 1A to the 2005 Regulations, which is also amended.
New regulation 6D provides for the notification of certain events to the Authority.
Regulation 8 replaces regulations 7, 7A and 7B of the 2005 Regulations with new regulations 7 and 7A.
New regulation 7 provides for approved withdrawal arrangements and sets out the circumstances for the Authority to give their approval.
New regulation 7A provides for regulated apportionment arrangements to be approved by the Authority with the concurrence of the Pension Protection Fund.
Regulation 9 substitutes a new regulation 8 of the 2005 Regulations, providing for separate sections of a multi-employer scheme to be treated as separate schemes.
Regulation 10 substitutes a new regulation 9 of the 2005 Regulations (dealing with frozen schemes and former employers), which reproduces the effect of the old regulation 9, but with necessary changes to deal with the new arrangements introduced by these Regulations.
Regulation 11 amends regulations 11 and 12 of the 2005 Regulations, making provision in connection with multi-employer money-purchase schemes.
Regulation 12 substitutes a new regulation for regulation 16 of the 2005 Regulations containing provisions for trustees to modify schemes to introduce rules providing for apportionment of debts under section 75 of the 1995 Act.
Regulations 13, 14 and 15 introduce Schedules 1, 2 and 3, which substitute amended provisions for Schedules 1, 1A and 1B to the 2005 Regulations including amended actuarial certificates.
Regulation 16 specifies regulatory functions for the Pensions Regulator for the purposes of Part 1 of the Pensions Act 2004 (c. 35).
Regulations 17, 18, 19 and 20 amend respectively the Pension Protection Fund (Multi-employer Schemes) (Modification) Regulations 2005 (S.I. 2005/441), the Pension Protection Fund (Entry Rules) Regulations 2005 (S.I. 2005/590), the Pensions Regulator (Financial Support Directions etc.) Regulations 2005 (S.I. 2005/2188) and the Occupational Pension Schemes (Scheme Funding) Regulations 2005 (S.I. 2005/3377).
These Regulations reduce costs on business, charities and the voluntary sector; an assessment of this impact has been made. Copies of the Impact Assessment are available in the libraries of both Houses of Parliament. Copies may be obtained from the Better Regulation Unit of the Department for Work and Pensions, level 4, The Adelphi, 1-11 John Adam Street, London WC2N 6HT and from the Department’s website at: http://www.dwp.gov.uk/resourcecentre/ria.asp.