In a bid to promote safeguards to pension schemes, the Pensions Regulator (TPR) has published a statement, Identifying your statutory employer, setting out the importance of and way of doing so.
In the statement, TPR sets out the legal responsibility of a statutory employer (or former employer) for meeting the scheme specific funding requirements of a defined benefit (DB) scheme and meeting a section 75 debt, amongst others. If a scheme is unable to identify its statutory employer, it may not be eligible for PPF protection. This may result in the members being seriously disadvantaged.
TPR advises trustees that they should act immediately in determining the statutory employer. From November 2011 onwards, trustees will be required to identify the statutory employer in the scheme return form.
TPR has also set-out the basic steps for how to identify the statutory employer in its statement, but emphasises that if the trustees ‘are not 100% sure of the position… [they] need to take action by requesting information from employers such as employment records and historic documents which note any employer departures from the scheme’. Failing this, trustees should seek legal advice.
Broadly, there are two major issues here:
Identifying the actual employers (this can be difficult in a group scheme with many employers).
Interpreting the legal definitions of “employer” and “former employer” to see how this applies. For example:
- Do companies with eligible employees who could join the scheme, but not have no actual active members on the scheme, count as employers?
- If members have benefits that continue to be linked to service, are they treated as “active members” for statutory purposes?
- Do any companies that have ceased to participate count still as an “employer”?