The Occupational Pension Schemes (Employer Debt, etc.) (Amendment) Regulations (Northern Ireland) 2005

Explanatory Note

(This note is not part of the Regulations)

These Regulations are made as a consequence of provisions in the Pensions (Northern Ireland) Order 2005 (“the 2005 Order”) and amend the Occupational Pension Schemes (Employer Debt) Regulations (Northern Ireland) 2005 (“the 2005 Regulations”) where debts arise under Article 75 of the Pensions (Northern Ireland) Order 1995 (“the 1995 Order”) in respect of certain occupational pension schemes. They also make minor amendments to the Occupational Pension Schemes (Minimum Funding Requirement and Actuarial Valuations) Regulations (Northern Ireland) 1996, the Pension Protection Fund (Entry Rules) Regulations (Northern Ireland) 2005 and the Pensions Regulator (Financial Support Directions etc.) Regulations (Northern Ireland) 2005.

Regulation 1 provides that the amendments made by regulation 2(1), (2), (5), (7) and (8) do not apply where the debt arose before the date on which these Regulations come into operation.

Regulation 2(3) and (7) makes minor amendments of the 2005 Regulations. In particular, the Salvation Army pension scheme is omitted from the list of schemes to which Article 75 of the 1995 Order does not apply, and the function of determining the proportion of any levy deficit or criminal deficit in the pension fund of a multi-employer money purchase scheme that is to be due from any of the employers is transferred from the scheme’s actuary to the scheme’s trustees or managers.

Regulation 2(4) amends regulation 5 of the 2005 Regulations so that where a debt has arisen under Article 75 of the 1995 Order on the leaving of an employer and an approved withdrawal arrangement has applied, valuations for events happening later are to ignore the debts that arose when the employer left.

Regulation 2(5) amends the 2005 Regulations by substituting new regulations 7 to 7B.

Under the new regulation 7 where a debt arises under Article 75 of the 1995 Order because of an employer ceasing to employ persons in employments covered by an occupational pension scheme where there was more than one such employer, and an arrangement (an “approved withdrawal arrangement”) is approved by the Pensions Regulator under which parties to the arrangement (“the guarantors”) are bound to make payments to the scheme if certain events occur, the debt becomes partly payable by the leaving employer, and partly by the guarantors at a later time (“the guarantee time”). (The amended provisions of the 2005 Regulations refer to “the Authority” but in accordance with Article 121(1) of the 1995 Order that means the Pensions Regulator.)

New regulation 7A provides for the part payable by the leaving employer to be calculated on the same basis as is used for minimum funding valuations under Article 56 of the 1995 Order, except that a deduction is made where liabilities attributable to employment with the employer have been transferred out before the withdrawal arrangement was approved.

New regulation 7B provides that the basis on which the part payable by the guarantors is calculated depends on the terms of the approved withdrawal arrangement. It may be the amount that would be payable if the leaving employer had ceased at the guarantee time to employ persons in employments covered by the scheme. Alternatively, it may be the amount that would be payable if there were no approved withdrawal arrangement, but with a deduction both for the amount payable by the leaving employer and for any transfers out of the scheme of liabilities attributable to employment with the leaving employer.

Regulation 2(6) amends regulation 9 of the 2005 Regulations so that a leaving employer who has paid the debt due from him under the new regulation 7A no longer counts as an employer for the purposes of Article 75 of the 1995 Order and the 2005 Regulations, regardless of whether the amount payable by the guarantors has been paid.

Regulation 2(8) inserts Schedules 1A and 1B into the 2005 Regulations. Schedule 1A sets out the requirements for the approval of withdrawal arrangements and imposes a requirement for the guarantors to notify the Pensions Regulator if certain events occur that are relevant to their solvency. Schedule 1B sets out the form that the scheme actuary’s certificate must take for the valuation of scheme assets and liabilities based on Article 56 of the 1995 Order that is needed to determine the amount of the debt payable by the leaving employer under the new regulation 7A.

Regulation 3 makes provision about the exercise of functions of the Pension Regulator under the 2005 Regulations, as amended by regulation 2 of these Regulations.

Regulation 4 makes an amendment of the Occupational Pension Schemes (Minimum Funding Requirement and Actuarial Valuations) Regulations (Northern Ireland) 1996 that is consequential on the amendments of Article 75 of the 1995 Order by Article 248 of the 2005 Order.

Regulation 5 corrects a minor error in the Pension Protection Fund (Entry Rules) Regulations (Northern Ireland) 2005.

Regulation 6 amends the Pensions Regulator (Financial Support Directions etc.) Regulations (Northern Ireland) 2005 so that, for the purposes of those Regulations and provisions of the 2005 Order relating to contribution notices, financial support directions and transactions at an undervalue, a former employer does not count as an employer if an approved withdrawal arrangement has applied and the part of the debt payable by the former employer under regulation 7A of the 2005 Regulations has been paid.

As these Regulations, in so far as they are made under Part II of the 1995 Order make, in relation to Northern Ireland only provision corresponding to provision contained in regulations made by the Secretary of State for Work and Pensions in relation to Great Britain, the requirement for consultation under Article 117(1) of the 1995 Order does not apply by virtue of paragraph (2)(e) of that Article and the requirement for consultation under Article 289(1) of the 2005 Order does not apply by virtue of paragraph (2)(e) of that Article.

Otherwise they are made before the end of the period of six months beginning with the coming into operation of Articles 248 and 249 of the 2005 Order, upon which they consequential, the requirement to consult under Article 289(1) of the Order does not apply by virtue of paragraph (2)(c) of that Article.