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(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 is satisfied that it is reasonable to do so having regard to such matters as the Authority considers 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 considers 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) (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 approves.

(6) If the Authority issues 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, of 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 considers that the approved withdrawal arrangement is no longer required.

(8) The Authority may issue a notice that it considers amount B (or the balance remaining) under an approved withdrawal arrangement should be paid but it may not issue such a notice unless it considers 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 considers 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 considers that an arrangement no longer requires to be continued in force, it may issue a notice to the parties to that effect.

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

Regulated apportionment arrangements

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) where an assessment period has not already commenced, the trustees of the scheme agree to the arrangement;

(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 its opinion in the circumstances described in the application it would be reasonable to issue a notice of approval.”.

Single employer sections, multi-employer sections, etc

9.  For regulation 8 (multi-employer schemes; sectionalised schemes) substitute—

“Single employer sections, multi-employer sections, etc

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.”.

Former employers

10.  For regulation 9 (former employers) substitute—

“Frozen schemes and former employers

9.—(1) In the application of section 75 of the 1995 Act to a scheme, subject to paragraph (3), references to employers include former employers.

(2) For the purposes of this regulation—

(a) a “former employer” means any person who employed persons in the description of employment to which the scheme relates but at the relevant time has ceased to do so;

(b) in relation to a frozen scheme, “freezing event” means the event in consequence of which the scheme became a frozen scheme (this is subject to regulation 6A);

(c) “relevant time” means in relation to a scheme which is not a frozen scheme, the applicable time, and in relation to a frozen scheme, the time of occurrence of the freezing event.

(3) A person shall not be included as a former employer if—

(a) he is a defined contribution employer;

(b) before 19th December 1996, he ceased to be a person employing persons in the description or category of employment to which the scheme related and was not regarded as a “former participator” for the purposes of the 1996 Regulations by virtue of regulation 6 of those Regulations (ceasing to participate: transitional provision);

(c) at a time before the relevant time, when the scheme had not commenced winding-up and the scheme continued to have active members, he—

(i) on or after 19^th December 1996 and before 6^th April 1997, ceased to be a person employing persons in the description or category of employment to which the scheme related and was not regarded as a “former participator” for the purposes of the 1996 Regulations by virtue of regulation 6 of those Regulations (ceasing to participate: transitional provision);

(ii) on or after 6^th April 1997 and before 6^th April 2008, ceased to be a person employing persons in the description or category of employment to which the scheme related and one of conditions A to I is met;

(iii) on or after 6^th April 2008 and before the applicable time, ceased to be a person employing persons in the description or category of employment to which the scheme related or an employment-cessation event or insolvency event occurs in respect of him and one of conditions A to I is met; or

(d) in relation to a frozen scheme, at a time on or after 6^th April 2008, after the freezing event, when the scheme had not commenced winding-up and before the applicable time, he ceased to be a person employing persons in the description or category of employment to which the scheme related, or an employment-cessation event or insolvency event occurred in respect of him and one of conditions A to I is met.

(4) In the application of regulation 6 to a frozen scheme which was a multi-employer scheme before the event as a result of which the scheme became a frozen scheme, in relation to a person who before the applicable time was a former employer under this regulation, an employment-cessation event shall be treated as having occurred where notice is given to the trustees or manager by such a person for the purposes of this paragraph.

(5) A notice given for the purposes of paragraph (4) must specify the date on which the employment-cessation event is to be treated as having occurred, being a date not earlier than 3 months before the date on which the notice is given, and not more than 3 months after that date.

(6) Condition A is that as a result of the employment-cessation event, insolvency event or assumption of his liabilities by another person, no debt arose under section 75(2) or (4) of the 1995 Act (or, before 6^th April 2005, under section 75(1) of that Act).

(7) Condition B is that no debt was treated as becoming due from him under section 75(2) or (4) of the 1995 Act (or, before 6^th April 2005, under section 75(1) of that Act).

(8) Condition C is that a debt was treated as becoming due from him under section 75(2) or (4) of the 1995 Act (or, before 6^th April 2005, under section 75(1) of that Act) and has been paid by him before the applicable time.

(9) Condition D is that in accordance with a withdrawal arrangement a debt that was treated as becoming due from him under section 75(4) of the 1995 Act and has been paid by him before the applicable time.

(10) Condition E is that in accordance with an approved withdrawal arrangement a debt was treated as becoming due from him under section 75(4) of the 1995 Act and has been paid by him before the applicable time.

(11) Condition F is that in accordance with a scheme apportionment arrangement a debt was treated as becoming due from him under section 75(2) or (4) of the 1995 Act and has been paid by him before the applicable time.

(12) Condition G is that in accordance with a regulated apportionment arrangement a debt was treated as becoming due from him under section 75(2) or (4) of the 1995 Act and has been paid by him before the applicable time.

(13) Condition H is that a debt was treated as becoming due from him and has not been paid solely because he was not notified of the debt, and of the amount of it, sufficiently in advance of the applicable time for it to be paid before that time.

(14) Condition I is that a debt was treated as becoming due from him under section 75(2) or (4) of the 1995 Act but at the applicable time it is excluded from the value of the assets of the scheme because it is unlikely to be recovered without disproportionate cost or within a reasonable time.

(15) For the purposes of paragraph (6), an “employment-cessation event” shall include circumstances where before 6^th April 2005—

(a) section 75(1) of the 1995 Act(11) applied when a scheme was not being wound-up, and

(b) an employer ceased to be a person employing persons in the description or category of employment to which the scheme related at a time when at least one other person continued to employ such persons(12).”.

Multi-employer money purchase schemes

11.—(1) In regulation 11 (money purchase schemes: valuations etc), in paragraph (1) omit “and 7”.

(2) In regulation 12(1) of the Employer Debt Regulations (multi-employer money purchase schemes)—

(a) omit sub-paragraph (b) of paragraph (1A), as substituted for paragraph (1) of regulation 10 of the Employer Debt Regulations;

(b) omit sub-paragraph (b) of paragraph (1B), as substituted for paragraph (1) of regulation 10 of the Employer Debt Regulations.

Modification of schemes

12.  For regulation 16 (modification of schemes: apportionment of section 75 debt) substitute—

“(1) This regulation applies to a trust scheme (whether or not a money purchase scheme) for the purposes of section 68(2)(e) of the 1995 (power of trustees to modify schemes by resolution for prescribed purposes).

(2) The trustees of such a trust scheme, after consulting such employers in relation to the scheme as they think appropriate, may by resolution modify the scheme for the purposes of making provision for an employer’s share of the difference for the purposes of regulation 6(2) to be attributed in a different proportion from that which would otherwise apply by virtue of the liability share.”.

Form of actuary’s certificate

13.  Schedule 1 (form of actuary’s certification) shall be substituted by the Schedule specified in Schedule 1 to these Regulations.

Withdrawal arrangements and Approved Withdrawal Arrangements

14.  Schedule 1A (multi-employer schemes: employer cessation events and approved withdrawal arrangements) shall be substituted by Schedule 2 to these Regulations.

Form of actuary’s certificate

15.  Schedule 1B (form of actuary’s certificate: scheme funding basis debts in approved withdrawal arrangement cases) shall be substituted by the Schedules specified in Schedule 3 to these Regulations.

The Pensions Regulator’s functions under the Employer Debt Regulations

16.—(1) The following functions under the Employer Debt Regulations are regulatory functions of the Pensions Regulator for the purposes of Part 1 of the 2004 Act—

(a) the power to make a direction under regulation 7(1);

(b) the power to issue a notice under section 7(3)(b);

(c) the power to make a direction under regulation 7(7);

(d) the power to issue a notice under regulation 7(8);

(e) the power to issue a notice under regulation 7(10);

(f) the power to issue a notice under regulation 7A(2).

(2) The Pensions Regulator may, if it thinks fit, delegate the functions specified in paragraph (1) to the Determinations Panel established under section 9 of the 2004 Act (the Determinations Panel).

(3) Omit regulation 3 of the Occupational Pension Schemes (Employer Debt etc) (Amendment) Regulations 2005(13).

Amendment of the Multi-Employer Regulations

17.  Omit regulations 15(3)(a) and 62(3)(a) of the Multi-Employer Regulations (multi-employer sections: approval notices under section 122)(14).

Amendment of the Entry Rules Regulations

18.  For paragraph (4) of regulation 2 of the Entry Rules Regulations (schemes which are not eligible schemes) substitute—

“(4) Paragraph (2) shall not apply in relation to an eligible scheme where before the beginning of an assessment period in relation to the scheme any of the following are in place—

(a) a scheme apportionment arrangement under the Occupational Pension Schemes (Employer Debt) Regulations 2005(15);

(b) a regulated apportionment arrangement under those Regulations;

(c) a withdrawal arrangement under those Regulations;

(d) an approved withdrawal arrangement under those Regulations.”.

Amendment of the FSD Regulations

19.  In paragraph (2) of regulation 15 of the FSD Regulations (former employers)—

(a) for “condition A, AA, B, C or D” substitute “A, AA, AB, B, C or D”;

(b) for sub-paragraph (aa) substitute—

“(aa) condition AA is that—

(i) such a debt became due;

(ii) under regulation 7 of the Occupational Pension Schemes (Employer Debt) Regulations 2005 an approved withdrawal arrangement came into force and the debt treated as due, as a result of that arrangement, is the approved withdrawal arrangement share and the cessation expenses attributable to the employer within the meaning of those Regulations; and

(iii) that debt has been paid;

(ab) condition AB is that—

(i) such a debt became due;

(ii) under regulation 6C of the Occupational Pension Schemes (Employer Debt) Regulations 2005 a withdrawal arrangement came into force and the debt treated as due, as a result of that arrangement, is the withdrawal arrangement share and the cessation expenses attributable to the employer within the meaning of those Regulations; and

(iii) that debt has been paid.”.

Amendment of the Scheme Funding Regulations

20.  For paragraph 3 of Schedule 2 to the Scheme Funding Regulations (frozen/paid up schemes) substitute—

“3.—(1) In the application of Part 3 of the 2004 Act and these Regulations to a scheme which has no active members, references to the employer have effect as if they were references to the person who was the employer immediately before the occurrence of the event after which the scheme ceased to have any active members (“the freezing event”).

(2) A person shall cease to be treated as an employer under paragraph (1) if after the freezing event he ceases to be treated as a former employer under regulation 9 of the Occupational Pension Schemes (Employer Debt) Regulations 2005.”.