Debts in multi-employer pensions schemes

Regulations have now been issued which deal with the issue of employer debts under section 75 Pensions Act 1995 when an employer leaves an underfunded multi-employer scheme. They are due to come into force on 2 September 2005.

Under the Regulations, an employer leaving a multi-employer scheme will be required to pay a section 75 debt calculated on the basis of the full costs of securing liabilities with annuities. However, the Regulations allow for the possibility of a leaving employer paying a lesser debt where an approved "withdrawal arrangement" is in force.

A withdrawal arrangement must be approved by the Pensions Regulator and be entered into between the leaving employer, the scheme trustees and "guarantors".