58B Deficiencies in the assets of a scheme on winding up.

1

If, in the case of an occupational pension scheme which is not a money purchase scheme, the value at the applicable time of the scheme’s liabilities, as determined in accordance with regulations, exceeds the value of its assets, as so determined, then—

a

an amount equal to the excess shall be treated as a debt due from the employer to the trustees of the scheme; and

b

if that debt has not been discharged before the default time then, for the purposes of the law relating to winding up, bankruptcy or sequestration as it applies in relation to the employer, it shall be taken to arise at the default time.

2

In this section—

• “the applicable time” means the earlier of—

a

any time when the scheme is being wound up which falls before the default time; or

b

the default time;

• “the default time” means–

a

in England and Wales—

i

where the employer is a company, immediately before the company goes into liquidation, within the meaning of section 247(2) of the Insolvency Act 1986; or

ii

where the employer is an individual, immediately before the commencement of his bankruptcy, within the meaning of section 278 of that Act; or

b

in Scotland—

i

where the employer is a company, immediately before the commencement of the company’s being wound up, within the meaning of section 129 of that Act; or

ii

where the employer is a debtor, within the meaning of the Bankruptcy (Scotland) Act 1985, immediately before the date of sequestration as defined in section 12(4) of that Act;

• “the employer” means the employer of persons in the description or category of employment to which the scheme relates;

• “money purchase scheme” has the same meaning as it has in section 58A above.

3

The power to make regulations conferred by subsection (1) above includes power to provide—

a

that, in calculating the value of the scheme’s liabilities, any provision of the scheme which limits the amount of its liabilities by reference to the amount of its assets is to be disregarded;

b

that the value of the scheme’s liabilities or assets is to be calculated and verified in such manner as may, in the particular case, be approved—

i

by a prescribed person,

ii

by a person with prescribed professional qualifications or experience, or

iii

by a person approved by the Secretary of State,

or that their value is to be calculated and verified in accordance with guidance prepared by a prescribed body.

4

This section is without prejudice to any other right or remedy which the trustees may have in respect of the deficiency.

5

A debt due by virtue only of this section shall be regarded neither as a preferential debt for the purposes of the Insolvency Act 1986 nor as a preferred debt for the purposes of the Bankruptcy (Scotland) Act 1985.

6

The Secretary of State may make regulations modifying this section in its application—

a

to any occupational pension scheme which applies to earners in employments under different employers;

b

to any case where a partnership is the employer, or one of the employers, in relation to an occupational pension scheme;

c

to any occupational pension scheme of which there are no members who are in pensionable service under the scheme, as defined in paragraph 3 of Schedule 16 to the 1973 Act; or

d

to any case where the assets and liabilities of the scheme are transferred to another occupational pension scheme.

7

The provisions of this section and of any regulations made under it override any provision of a scheme to the extent that it conflicts with this section or those regulations.