The Pension Protection Fund (Multi-employer Schemes) (Modification) Regulations 2005

Modification of sections 175 to 181 of the Act: non-segregated schemes

74.—(1) This regulation applies to a multi-employer scheme which is not divided into two or more sections (“a non-segregated scheme”).

(2) In the case of a scheme to which this regulation applies, references to “an eligible scheme” in sections 175 to 181 of the Act (pension protection levies) are to a non-segregated scheme which—

(a) is not a money purchase scheme; or

(b) is not a prescribed scheme or a scheme of a prescribed description under section 126(1)(b) of the Act (eligible schemes).

(3) Section 175 of the Act shall be modified so that it shall be read as if—

(a) in the case of a scheme to which this regulation applies, the rules of which contain a requirement for the trustees or managers to segregate such part of the assets as is attributable to the liabilities of the scheme to provide pensions or other benefits to or in respect of the pensionable service of some or all of the members of the scheme by reference to an employer in relation to the scheme which would be triggered when such an employer ceased to participate in the scheme, for paragraph (a) of subsection (2), there were substituted the following paragraph—

“(a) a risk based pension protection levy is assessed by reference to—

(i) the difference between the value of the scheme’s assets (disregarding any assets representing the value of any rights in respect of money purchase benefits under the scheme rules) and the amount of its protected liabilities,

(ii) where the Board considers it appropriate, the scheme rules containing a requirement for the trustees or managers of the scheme to segregate such part of the assets of the scheme as is attributable to the scheme’s liabilities to provide pensions or other benefits to or in respect of the pensionable service of some or all of the members by reference to an employer in relation to the scheme in circumstances where that employer ceases to participate in the scheme,

(iii) except in relation to any prescribed scheme or scheme of a prescribed description, the likelihood of an insolvency event occurring in relation to each employer in relation to the scheme, and

(iv) if the Board considers it appropriate, one or more other risk factors mentioned in subsection (3), and”;

(b) in the case of a scheme to which this regulation applies, the rules of which give the trustees or managers an option to segregate such part of the assets as is attributable to the liabilities of the section to provide pensions or other benefits to or in respect of the pensionable service of some or all of the members of the section by reference to an employer in relation to that section when an employer in relation to the section ceases to participate in the scheme, for paragraph (a) of subsection (2), there were substituted the following paragraph—

“(a) a risk based pension protection levy is assessed by reference to—

(i) the difference between the value of the scheme’s assets (disregarding any assets representing the value of any rights in respect of money purchase benefits under the scheme rules) and the amount of its protected liabilities,

(ii) where the Board consider it appropriate, whether or not the scheme rules containing a requirement for the trustees or managers of the scheme to segregate such part of the assets of the scheme as is attributable to the scheme’s liabilities to provide pensions or other benefits to or in respect of the pensionable service of some or all of the members by reference to an employer in relation to the scheme in circumstances where that employer ceases to participate in the scheme,

(iii) except in relation to any prescribed section or section of a prescribed description, the likelihood of an insolvency event occurring in relation to each employer in relation to the scheme, and

(iv) if the Board considers it appropriate, one or more other risk factors mentioned in subsection (3), and”; and

(c) in the case of a scheme to which this regulation applies, the rules of which do not contain a requirement for the trustees or managers to segregate such part of the assets as is attributable to the liabilities of the scheme to provide pensions or other benefits to or in respect of the pensionable service of some or all of the members of the scheme by reference to an employer in relation to that scheme which would be triggered when such an employer ceased to participate in the scheme, for paragraph (a) of subsection (2), there were substituted the following paragraph, for paragraph (a) of subsection (2), there were substituted the following paragraph—

“(a) a risk based pension protection levy is assessed by reference to—

(i) the difference between the value of the scheme’s assets (disregarding any assets representing the value of any rights in respect of money purchase benefits under the scheme rules) and the amount of its protected liabilities,

(ii) except in relation to any prescribed scheme or scheme of a prescribed description, the likelihood of an insolvency event occurring in relation to all the employers in relation to the scheme, and

(iii) if the Board considers it appropriate, one or more other risk factors mentioned in subsection (3), and”.