Overview

This bill aims to clarify how liabilities are calculated and assigned within multi-employer pension schemes, particularly protecting smaller unincorporated businesses from disproportionate responsibility for pension shortfalls. It introduces new rules for calculating liabilities, assigning responsibility, and handling situations where liabilities cannot be attributed to a specific employer. The bill also addresses the transfer of unincorporated businesses to limited companies.

Description

The bill makes several key changes to existing regulations governing multi-employer pension schemes.

Liability Calculation:

It amends the existing method for calculating scheme liabilities, specifically for multi-employer schemes. The new calculation will refer to the scheme's technical provisions, using either the methodology from the last actuarial valuation if deemed appropriate, or a new actuarial valuation if necessary. Trustees have 12 months to decide on the appropriate method following an employer's exit; otherwise, the regulator will decide.

Liability Responsibility:

The bill alters the rules on assigning responsibility for liabilities. An employer will not be responsible for liabilities relating to scheme members who never worked for that employer and cannot be attributed to any other employer in the scheme.

Transfer to Limited Companies:

The bill clarifies that transferring an unincorporated business within a multi-employer pension scheme to a limited company does not, in itself, trigger an "employment-cessation event" if specific conditions are met. The limited company assumes the employer’s responsibilities in the scheme.

Unattributable Liabilities:

The bill introduces a new provision for situations where pension scheme liabilities cannot be attributed to any specific employer. In such cases, a designated board will assume responsibility if the scheme's assets are less than the protected liabilities.

Government Spending

The bill doesn't directly specify government spending figures. However, the government may incur costs associated with administering the new regulations, potential liabilities assumed by the designated board, and any required regulatory actions. The overall financial impact will depend on the number of cases requiring intervention and the size of the liabilities involved.

Groups Affected

• Unincorporated Businesses: Potentially benefit from reduced liability for pension shortfalls.
• Multi-employer Pension Schemes: Will need to adapt to the new liability calculation and assignment rules.
• Trustees of Multi-employer Pension Schemes: Have increased responsibilities regarding liability calculation and reporting.
• Regulator: Takes on a more active role in resolving disputes regarding liability calculation.
• The Pension Protection Fund (PPF): May experience altered levels of financial responsibility depending on the outcome of the new regulations.
• Limited Companies: Increased clarity on assuming liability during business transfer.

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