On 24 July 2014, the UK Government launched a consultation on draft regulations requiring a ring-fenced bank to ensure that it is not, and cannot become, liable for the pension schemes of the rest of its group, except for those of other ring-fenced banks in its group or of a wholly-owned subsidiary. Under current UK pension law, within a group pension scheme, if one entity fails then the others can become obliged, in certain circumstances, to support the scheme. The ring-fencing legislation aims to protect ring-fenced banks from the liabilities that might arise in the event of the failure of another entity in the group. The proposed regulations are likely to result in the necessary restructuring of any existing multi-employer schemes to which a ring-fenced bank is an employer, including the segregation of assets and liabilities. Therefore the Government is also proposing conferring additional powers on trustees or managers of schemes to make such adjustments as may be needed to ensure compliance by a ring-fenced bank. The requirement for ring-fenced banks to ensure they will not be liable for the pension liabilities of other entities in its group comes into effect in 2026. However, some of the provisions which will allow relevant banks to begin planning and implementing restructuring will come into force in 2015. Responses to the consultation are due by 15 October 2014.
The consultation is available at: