The government has issued an announcement clarifying its intentions as to the definition of “employment-cessation event” in the context of the proposed changes to the employer debt provisions of section 75 of the Pensions Act 1995 (how employer debts are calculated and apportioned in defined benefit schemes when an employer in a multi-employer scheme ceases to have employees in a category of employment to which the scheme relates at a time when other employers still have active members). These proposals were summarised in our briefing Employer debt – proposed changes (August 2007).
The government’s consultation document proposed to change the definition of “employment-cessation event” so that an immediate debt would be triggered when a multi-employer scheme merged with another scheme or was closed to future accrual. The government has now stated that its intention was to tackle the potential problem of scheme abandonment and not to affect legitimate scheme mergers or transfers, or to trigger a section 75 debt on closure of a scheme to future accrual where the employer continues to fund the scheme. Changes to the draft regulations are therefore expected.