Flexible apportionment arrangements meaning

THIS CHECKLIST APPLIES TO MULTI-EMPLOYER DEFINED BENEFIT OCCUPATIONAL PENSION SCHEMES General For an employer leaving an underfunded defined benefit occupational scheme, apportionment arrangements provide an option other than paying an s 75 debt in full when an employment-cessation event occurs. There are three forms of apportionment arrangement: scheme apportionment arrangement (SAA) regulated apportionment arrangement (RAA) flexible apportionment arrangement (FAA) The statutory requirements for apportionment are prescribed in the Employer Debt Regs, SI 2005/678, regs 6B, 6E and 7A, together with the definitions in reg 2(1). The Pensions Regulator (TPR) has produced guidance to help employers and trustees understand the available approaches for addressing s 75 debts, including apportionment arrangements. If an apportionment arrangement could adversely affect a scheme’s ability to meet its pension liabilities, the exiting employer and the remaining employers should consider seeking clearance from TPR...

THIS PRACTICE NOTE APPLIES IN RELATION TO DEFINED BENEFIT OCCUPATIONAL PENSION SCHEMES This Practice Note sets out approaches for addressing a section 75 debt in the context of a transaction, with particular emphasis on multi-employer schemes where a range of options may exist. It also outlines considerations connected to the Pensions Regulator's clearance process and the notifiable events regime. For trustee-focused considerations when deciding how a section 75 debt should be managed on an employment cessation event, see Practice Note: employment cessation events—trustee decision-making process. For matters specific to section 75 debts triggered during a group reorganisation, see Practice Note: Intra-group reorganisations and pensions. Determining whether a section 75 debt will be triggered Section 75 debt triggers A section 75 debt (often called an 'employer debt') may become payable by the employer of a defined benefit occupational pension scheme where: the scheme is a multi-employer arrangement and an employment cessation event occurs in relation to that employer (described in this Practice...

This guide is chiefly for trainees, newly qualified lawyers and anyone unfamiliar with pensions law. A key area is the legislation on section 75 debts (also referred to as employer debts or statutory debts), which is found mainly in: sections 75–75A of the Pensions Act 1995; and supporting regulations, in particular the Occupational Pension Schemes (Employer Debt) Regulations 2005, SI 2005/678 (the Employer Debt Regulations) The employer debt regime primarily concerns employers participating in defined benefit (DB) occupational pension schemes. In very limited cases it can extend to defined contribution (DC) schemes, although those scenarios are not covered in this note. Broadly, the rules allow a non‑priority liability to arise, owed by an employer (or multiple employers) to an underfunded DB scheme, when a ‘section 75 triggering event’ occurs. Triggering events There are three triggering events: when an employer participating in a DB scheme experiences an ‘insolvency event’, or when the trustees of the pension scheme make an...

THIS PRACTICE NOTE APPLIES TO OCCUPATIONAL DEFINED BENEFIT PENSION SCHEMES THAT ARE SUBJECT TO EMPLOYER DEBT REQUIREMENTS Since 27 January 2012, it has been open to parties to implement a flexible apportionment arrangement in order to: avoid triggering an employer debt under the Pensions Act 1995, s 75 altogether (for further information on s 75 debts (also known as employer debts), see Practice Note: When is a section 75 debt triggered?), or reduce the amount that may become payable if an employer leaves a multi-employer scheme (or otherwise ceases to employ active members) Flexible apportionment arrangements do not replace other mechanisms for dealing with an employer debt, eg scheme apportionment arrangements or the corporate restructuring easements, and cannot be used where the scheme has entered insolvency or winding up. Introduced chiefly to assist where several employers cease to employ active members in the same scheme at broadly the same time in corporate restructuring scenarios, their use is generally preferred to the...