Last month, the Regulator published a consultation document on guidance aimed at trustees of all multi-employer defined benefit schemes. Trustees will need to bear this guidance in mind when dealing with an employer departure.

The guidance summarises the six ways by which a departing employer can lawfully remove or modify its s75 debt and outlines the factors trustees should take into account when considering an employer’s departure. The Regulator expects trustees to engage constructively with a departing employer wishing to use one of these mechanisms, to ensure that the correct process is followed and to react accordingly to any loss of employer covenant (strength of support for the scheme). The Regulator says that a departing employer, or other corporate activity, should not be the only trigger for covenant assessment and that trustees have an ongoing responsibility to actively and regularly monitor the employer covenant as this informs decisions on all aspects of the scheme’s funding.

The closing date for responses is 23 September 2010, and once finalised, the guidance will replace the current multi-employer withdrawal arrangements guidance published in April 2008.