In our July e-bulletin, we reported on the importance of trustees of schemes with defined benefits to identify their statutory employers. Statutory employers are legally responsible to the scheme for, among other things, meeting the scheme's statutory funding objective and paying any section 75 debt; the insolvency of a statutory employer also enables a scheme to be assessed for compensation from the Pension Protection Fund. From November 2011, trustees will have to identify the statutory employers who are legally responsible to the scheme, in the Scheme return. Trustees also have to ensure that any changes to the identity of statutory employers are updated through Exchange (the Regulator's online registration system).
In July, the Pension Regulator issued a statement aimed at helping trustees identify the statutory employer – to view our update on this, click here. The Regulator has now followed this up with a "bite size" online e-learning module to help trustees identify their statutory employers. The module, though basic, deals separately with closed and open schemes and advises the trustees to obtain legal advice on complex issues.
We understand that the Regulator is still finalising the questions and the exact form of the information that it will require in the Scheme return and that it will be running a 'warm-up' campaign this autumn to prepare scheme trustees for the new requirements.
A key issue for the trustees, in practice, would be getting access to information from the current participating employers (and other employers in the group) to help them with the identification process. The exercise potentially requires a review of current and historic employment contracts. For confidentiality reasons, employers may be reluctant to make this data available to the trustees; it is debatable how much information employers even hold on former employees anyway. Equally, if the employers provide this information to the trustees, the trustees would want reasonable comfort or a warranty from the employers as to its accuracy.