The Pensions Regulator is urging trustees to ensure that they are properly identifying the statutory employer(s) of their schemes, and to assess the support that comes from different employers associated with the scheme. This is clearly important when assessing covenant strength to ensure that the right entity/entities are under the spotlight.
The Pensions Regulator also emphasises that it may often be the case that entities other than the statutory employer are the ones who provide the key financial support to pension schemes. However, it is nevertheless the statutory employer(s) who will be the employer(s) legally responsible for:
- meeting the scheme funding objective of the pension scheme;
- paying the section 75 debt when an employment cessation event occurs on employer departure from a multi-employer scheme, on scheme wind-up or on employer insolvency; and
- triggering entry to a Pension Protection Fund (PPF) assessment period on insolvency.
From November 2011, trustees will therefore be asked to identify their statutory employer(s) to the Pensions Regulator on their scheme returns.