Overview

This bill aims to improve the financial security of multi-employer pension schemes in the UK. It clarifies how liabilities are calculated and allocated among participating employers, particularly protecting smaller, unincorporated businesses from potentially crippling debts.

Description

The Multi-employer Pension Schemes Bill makes several key changes to existing regulations:

Liability Calculation

The bill amends the calculation of liabilities for multi-employer pension schemes. Instead of using the existing method, it will use the scheme's technical provisions (as defined in the 2004 Pensions Act). Trustees must determine the calculation method within 12 months of an employer leaving the scheme; if they fail, the Regulator will make the decision.

Employer Responsibility

The bill limits an employer's responsibility for liabilities to those related to their own employees. It prevents employers from being held responsible for liabilities stemming from employees who never worked for them. If liabilities cannot be attributed to a specific employer, responsibility will fall to the Pension Protection Fund.

Transfer to Limited Companies

The bill clarifies that the transfer of an unincorporated business to a limited company will not, in itself, trigger an employment-cessation event and subsequent liability for pension scheme debts, provided the transfer is the main purpose of the limited company's incorporation.

Unattributable Liabilities

The bill introduces a new duty for the Pension Protection Fund (PPF) to assume responsibility for liabilities that cannot be attributed to any specific employer within a multi-employer scheme, if the scheme's assets are insufficient to cover the liabilities. The PPF will be required to take responsibility in these circumstances.

Government Spending

The bill is expected to increase government spending through the Pension Protection Fund (PPF) as it will be responsible for assuming unattributable liabilities in certain situations. The exact financial implications are difficult to estimate without further information and will depend on the number of cases where this new responsibility is triggered.

Groups Affected

• Multi-employer pension schemes: These schemes will see changes in how liabilities are calculated and allocated among participating employers.
• Employers in multi-employer schemes: Smaller businesses, particularly unincorporated ones, will benefit from reduced liability for pension debts not related to their employees.
• Pension scheme trustees: They will have new responsibilities for determining liability calculation methods and applying to the PPF in certain situations.
• The Pension Protection Fund (PPF): This will assume responsibility for liabilities in cases where they cannot be attributed to a specific employer, potentially increasing its financial burden.
• Employees in multi-employer pension schemes: The changes aim to increase the security of their pensions by clarifying liability and ensuring that the PPF steps in when needed.

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