Sponsoring employer meaning

POWER CLAUSE / RULE HELD BY REQUIRES AGREEMENT OR CONSULTATION WITH SUBJECT TO Authority to amend; to wind the scheme up or delay winding-up; to cease future benefit accrual; to shut to new joiners; to readmit employees to membership of the scheme Discretion to set the employer contribution rate; to lower or suspend contributions; to apportion statutory debts Ability to enhance or vary benefits; to permit early retirement pensions and set actuarial reductions; to allow incapacity pensions, decide whether a member meets the incapacity definition, and reduce or pause such pensions; to grant pensions for serious ill-health; to apply actuarial uplifts for late retirement; to fix the rate at which pension is exchanged for a lump sum; to commute trivial pensions; to provide a bridging pension; to award discretionary increases to pensions; to make unauthorised payments Capacity to admit new employers or end their participation; to replace the principal employer; to transfer members’ benefits into or out of the scheme Authority to return...

Statutory minimum increase rates The summary below sets out the current statutory minimum uplift that occupational pension schemes must apply each year to each tranche of pension. Period of pensionable service to which the pension relates (or, for money purchase benefits, the period in which contributions were paid): Before 6 April 1997 — no statutory minimum increase. However, to refund surplus assets to a sponsoring employer under the Social Security Pensions Act 1975, s 58A, it was necessary (until 5 April 2006) to revalue all pensions in payment (excluding GMPs and money purchase benefits) annually in line with RPI, capped at 5%. Despite the absence of a statutory minimum, most defined benefit schemes provide some pre-1997 indexation under scheme rules or as a discretionary benefit. As at March 2023, research indicates that only 17% of members of private sector defined benefit schemes receive no pre-1997 indexation on benefits. There have been calls on the government to legislate to mandate inflation-linked increases to pensions...

In this issue: Funding and investment Members and benefits Types of workplace pension schemes The Pensions Regulator Pensions dashboards Daily and weekly news alerts Dates for your diary Trackers Funding and investment TPR calls for endgame strategy shift as it publishes Annual Funding Statement 2025 The Pensions Regulator (TPR) issued its Annual Funding Statement (AFS) on 29 April 2025 for trustees and sponsoring employers of occupational defined benefit (DB) pension schemes, the first to sit under the new DB funding code introduced in November 2024. The statement sets out TPR’s expectations for the reformed regime and is most relevant to schemes with valuation dates from 22 September 2024 to 21 September 2025, now described as Tranche 24/25 (T24/25) to align with the calendar year, having previously been intended as Tranche 20 (T20). In appendix 1, TPR provides further clarification on its December 2024 guidance on assessing the employer covenant, and appendix 2 explains how trustees...

On 23 February 2024, the DWP said it was inviting broad industry views on what it calls surplus extraction. This permits workplace pension schemes to deploy assets exceeding those needed to cover liabilities to enhance member benefits or strengthen the sponsoring employer. The consultation, part of the government’s wider productive finance agenda, is aimed at unlocking the retirement market—often described as a sleeping giant—to channel more capital into the domestic economy. Official data released on 15 February 2024, firmly confirmed that the UK had slipped into a technical recession, with gross domestic product declining for a second successive quarter overall...

Introduction TPR’s draft Code offers practical direction to trustees on fulfilling all DB scheme funding obligations. It aims to assist trustees, sponsoring employers and their advisers in managing and planning DB funding over the long term while supporting compliance with the law. The draft Code will introduce clearer DB funding benchmarks, enhance TPR’s oversight of the market, and provide greater support in safeguarding member benefits. At the same time, it retains flexibility to accommodate scheme‑specific funding approaches. What was the background to TPR’s second consultation on the draft DB funding code and its regulatory approach? The draft Code has been completed to reflect consultation feedback, the relevant Regulations, and TPR’s extensive engagement with the industry. TPR first consulted in March 2020, then launched a three‑month consultation on the draft Code in December 2022 alongside a consultation on its regulatory approach. In March 2024, TPR also consulted on its approach within its statement of strategy, seeking views from trustees and advisers on the type and the extent of...

What is an assessment period? When a qualifying insolvency event affects the sponsoring employer of an eligible scheme, the scheme moves into a Pension Protection Fund (PPF) assessment period as a result of that event. This arises on the occurrence of that event. The day on which that period starts is known as the ‘assessment date’ for the scheme. Since 3 January 2012, the assessment period is no longer required to last for at least 12 months. Throughout the assessment period, the PPF considers whether the scheme satisfies the requirements for entry into the PPF. In particular, the PPF will appoint an actuary to carry out a valuation of the scheme as at the assessment date, in order to determine whether the scheme’s assets are less than the protected liabilities—broadly, the benefits the PPF would pay to members if the scheme were to enter the PPF...

This practice note applies to defined benefit occupational pension schemes The importance of identifying a scheme’s statutory employer(s) A fundamental element of the law governing occupational pension schemes, particularly defined benefit (DB) schemes, is that the main burden of supporting the scheme lies with its sponsoring employers, as a matter of law alone indeed. An employer might have exited the scheme previously without settling all liabilities owed to it; in such circumstances they may still be a ‘statutory employer’ even though they no longer participate. They may therefore continue to bear obligations in relation to the scheme. Under the registered pension scheme regime, various specific obligations fall upon those who qualify as ‘statutory employers’, a notion carried over from the earlier tax-exempt approval regime in force before A-day (for further information on the pre A-day regime, see The pre A-day pensions tax regime [Archived]). These duties will typically extend beyond those that a participating employer assumes under the scheme’s trust deed and rules. For...

Use of terms ‘connected’ and ‘associate’ in pensions Although initially coined within the insolvency/bankruptcy regime set out in the Insolvency Act 1986 and underlying regulations, the notions of ‘association’ and ‘connection’—together with the allied idea of ‘control’—have, over time, been adopted and applied across various parts of the UK’s pensions legislation framework for practical purposes in appropriate cases. Examples include: Moral hazard powers — the terms are employed in the moral hazard provisions of the Pensions Act 2004, in practice to assess the degree of distance or proximity of entities from sponsoring employers of occupational pension schemes, and whether such entities might be susceptible to the Pensions Regulator’s moral hazard powers, for example the issue of financial support directions and contribution notices — for further information, see Practice Notes: Contribution notices and Financial support directions Employer-related investments — the terms are used in the employer-related investment framework in relation to the capacity of trustees of occupational pension schemes to enter into dealings with the schemes’...

1 Background 1.1 This policy covers the [ trustees (‘the Trustees’) OR directors of [ insert company name ] (‘the Trustees’), acting in its role as corporate trustee ] of the [ insert name of pension scheme ] (‘the Scheme’). 1.2 Each Trustee has an obligation to act even‑handedly and to advance the aims of the Scheme, while considering the interests of the Scheme’s beneficiaries as a whole. Beneficiaries comprise [ active members, ] pensioners, deferred members, and those asserting rights through them, such as dependants. 1.3 The Trustees may, where appropriate, consider the interests of [ insert name of sponsoring employer ] (the ‘Employer’) as sponsor of the Scheme, so long as this does not cut across their fiduciary obligations to beneficiaries. Legal advice should be obtained if it is necessary to determine whether a distinct fiduciary duty is also owed to the Employer. 1.4 The Trustees acknowledge that, at times, their personal interests or other responsibilities may conflict with—or could reasonably be...

To: the [ active AND/OR deferred AND/OR pensioner ] members [ (the “Members”) ] of the [ insert name of pension scheme ] [ (the “Scheme”) ] From: The trustees of the Scheme Date: [ Insert date sent to members ] The Pensions Act 2004 (the “2004 Act”) and the Pensions Regulator’s General Code of Practice (the “General Code of Practice”) require occupational pension schemes to have arrangements ensuring that at least one third of trustees are nominated by members, unless the Scheme is exempt under legislation. Background Consistent with the 2004 Act and the General Code of Practice, the trustee [ s ] of the Scheme (the “Trustees”) invite nominations from those eligible to nominate for [ insert number of member-nominated trustees sought ] new member-nominated trustee roles. The current position The Scheme is currently constituted by [ insert total number of trustees ] trustees, comprising [ insert number of MNTs ] trustees nominated by the Members (the...