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

Made: 2nd March 2005

Laid before Parliament: 2nd March 2005

Coming into force in accordance with regulation 1

The Secretary of State for Work and Pensions, in exercise of the powers conferred upon him by sections 307(1)(b) and (2)(b) and (e), 315(1), (2), (4) and (5) and 318(1) and (4)(a) of the Pensions Act 2004 , and of all other powers enabling him in that behalf, by this instrument, which contains regulations made before the end of the period of six months beginning with the coming into force of the provisions of that Act by virtue of which they is made , hereby makes the following Regulations:

PART 1 — PRELIMINARY

Citation, commencement and interpretation

1

• (1) These Regulations may be cited as the Pension Protection Fund (Multi-employer Schemes) (Modification) Regulations 2005 and shall come into force—

• (a) for the purposes of this regulation and regulations 2(2)(b), 3(2)(d), 5(2)(d), 9(1)(a) and (2)(a), 14(3)(b), 15(2)(e), 18(c), 24(1)(a) and (2)(a), 28(4)(b), 29(2)(d), 32(d), 38(1)(d)(i), 39(1)(a) and (2)(a), 45(4)(b), 46(2)(d), 49(d), 54(1)(d)(i), 55(1)(a) and (2)(a), 63(1) and 73(3) for the purpose only of the making of regulations on 9th March 2005; and

• (b) for the purposes of regulation 76, on whichever is the later of—

• (i) the day which is 21 days after the date on which this instrument is laid, or

• (ii) the day on which section 286 of the Pensions Act 2004 comes into force;

• (c) for the purposes of regulations 4, 16, 30, 47, 63(2), 73(2)(b) and 74(2) on 1st April 2005; and

• (d) for all other purposes on 6th April 2005.

• (2) In these Regulations—

• “the Act” means the Pensions Act 2004;

• “the assessment date” means the date on which the assessment period in relation to the scheme or section, or (where there has been more than one such assessment period) the last one, began;

• “employer”, in relation to a single-employer section of a segregated scheme which has no active members, includes the person who was the employer of persons in the description of employment to which the scheme or section relates immediately before the time at which the scheme or section ceased to have any active members in relation to it;

• “multi-employer section” means a section of a segregated scheme which has at least two employers in relation to that section;

• “pensionable service” has the meaning given by paragraph 36(4) of Schedule 7 to the Act (accrual rate, pensionable service and pensionable earnings);

• “segregated scheme” means a multi-employer scheme which is divided into two or more sections where—any contributions payable to the scheme by an employer in relation to the scheme or by a member are allocated to that employer's or that member's section; anda specified proportion of the assets of the scheme is attributable to each section of the scheme and cannot be used for the purposes of any other section.

• (3) In the application of Part 2 of the Act, the definition of “multi-employer scheme” in section 307(4) of the Act and of these Regulations, “employer”, in relation to a multi-employer scheme that is not a segregated scheme or a multi-employer section of a segregated scheme—

• (a) in an assessment period, includes any person who before the assessment date has ceased to be the employer of persons in the description of employment to which the scheme or section relates unless condition A, B, C,D, E or F is satisfied where—

• (i) condition A is that a debt under section 75 of the Pensions Act 1995 (deficiencies in the assets) became due from that employer and the full amount of the debt has been paid before the assessment date;

• (ii) condition B is that—

• (aa) such a debt became due;

• (bb) a legally enforceable agreement has been entered into the effect of which is to reduce the amount which may be recovered in respect of the debt; and

• (cc) the reduced amount has been paid in full before the assessment date;

• (iii) condition C is that such a debt became due but before the assessment date it is excluded from the value of the assets of the scheme or section because it is unlikely to be recovered without disproportionate costs or within a reasonable time;

• (iv) condition D is that at the time at which any such person ceased to be the employer of persons in the description of employment to which the scheme or section relates the value of the assets of the scheme or section was such that no such debt was treated as becoming due;

• (v) condition E is that—

• (aa) there is a restructuring within regulation 6ZB or 6ZC of the Occupational Pension Schemes (Employer Debt) Regulations 2005 (employment-cessation events: exemptions);

• (bb) in that restructuring, the employer was the exiting employer for the purposes of those Regulations (see the definition of “exiting employer” in regulation 2(3A) of those Regulations (interpretation)); and

• (cc) regulation 6ZA(3) or (4) of those Regulations (employment-cessation events: general) does not apply in relation to that restructuring;

• (vi) condition F is that a flexible apportionment arrangement has taken effect in accordance with regulation 6E of the Occupational Pension Schemes (Employer Debt) Regulations 2005 (flexible apportionment arrangements) where the employer was the leaving employer within the meaning given in paragraph (7) of that regulation;

• (b) in any other case, includes any person who before the assessment date has ceased to be the employer of persons in the description of employment to which the scheme or section relates unless condition A, B, C,D, E or F is satisfied where—

• (i) condition A is that a debt under section 75 of the Pensions Act 1995 became due from that employer and the full amount of the debt has been paid before the assessment date;

• (ii) condition B is that—

• (aa) such a debt became due;

• (bb) a legally enforceable agreement has been entered into the effect of which is to reduce the amount which may be recovered in respect of the debt; and

• (cc) the reduced amount has been paid in full before the assessment date;

• (iii) condition C is that such a debt became due but before the assessment date it is excluded from the value of the assets of the scheme or section because it is unlikely to be recovered without disproportionate costs or within a reasonable time;

• (iv) condition D is that at the time at which any such person ceased to be the employer of persons in the description of employment to which the scheme or section relates the value of the assets of the scheme or section was such that no such debt was treated as becoming due.

• (v) condition E is that—

• (aa) there is a restructuring within regulation 6ZB or 6ZC of the Occupational Pension Schemes (Employer Debt) Regulations 2005 (employment-cessation events: exemptions);

• (bb) in that restructuring, the employer was the exiting employer for the purposes of those Regulations (see the definition of “exiting employer” in regulation 2(3A) of those Regulations (interpretation)); and

• (cc) regulation 6ZA(3) or (4) of those Regulations (employment-cessation events: general) does not apply in relation to that restructuring.

• (vi) condition F is that a flexible apportionment arrangement has taken effect in accordance with regulation 6E of the Occupational Pension Schemes (Employer Debt) Regulations 2005 where the employer was the leaving employer within the meaning given in paragraph (7) of that regulation.

PART 2 — SEGREGATED SCHEMES:

SINGLE EMPLOYER SECTIONS

Application and effect

2

• (1) This regulation applies to a section of a segregated scheme with one employer in relation to that section in circumstances where—

• (a) an insolvency event occurs in relation to an employer in relation to that section; or

• (b) the trustees or managers of the scheme become aware that the employer in relation to that section is unlikely to continue as a going concern and meets the requirements prescribed under subsection (1)(b) of section 129 of the Act (applications and notifications for the purposes of section 128).

• (2) Except as otherwise provided in this Part, in a case to which this regulation applies—

• (a) Part 2 of the Act, except Chapter 4, shall be read as if it contained the modifications provided for by this Part; and

• (b) references in Part 2 of the Act, except in Chapter 4, to—

• (i) “scheme rules” shall be read as if they were references to “scheme rules relating to the section”;

• (ii) “the scheme” shall be read as if they were references to “the section”;

• (iii) “the employer” shall be read as if they were references to “the employer in relation to the section”; and

• (iv) “trustees or managers of the scheme” shall, in relation to a section of a segregated scheme, be read as if they were references to “trustees or managers with ultimate responsibility for the administration of the section”.

• (3) Paragraph (2) shall not have effect in relation to section 174 of the Act (initial levy).

Notification of insolvency events, confirmation of scheme status etc.

3

• (1) Section 120 of the Act (duty to notify insolvency events in respect of employers) shall be modified in its application to a section of a segregated scheme to which regulation 2 applies so that it shall be read as if—

• (a) for the words “in the case of an occupational pension scheme, an insolvency event occurs in relation to the employer” in subsection (1), there were substituted the words “ in the case of a multi-employer scheme which is divided into two or more sections (“a segregated scheme”), an insolvency event occurs in relation to an employer in relation to a section of the scheme in circumstances where that employer is the only employer in relation to that section ”; and

• (b) after subsection (2), there were inserted the following subsection—

(2A) Where the trustees or managers of a section of a segregated scheme receive a notice from an insolvency practitioner under subsection (2), they must send a copy of that notice as soon as practicable to the trustees or managers of each section of the scheme (if different) and to all the employers in relation to the scheme.

• (2) Section 122 of the Act (insolvency practitioner's duty to issue notices confirming status of the scheme) shall be modified in its application to a section of a segregated scheme to which regulation 2 applies so that it shall be read as if—

• (a) for the words “employer in relation to an occupational pension scheme” in subsection (1), there were substituted the words “ employer in relation to a section of a segregated scheme in circumstances where that employer is the only employer in relation to that section ”;

• (b) in subsection (2)—

• (i) after the words “a scheme rescue is not possible” in paragraph (a), there were inserted the words “ in relation to the relevant section of the scheme ”; and

• (ii) after the words “a scheme rescue has occurred” in paragraph (b), there were inserted the words “ in relation to the relevant section of the scheme ”;

• (c) for the words “in relation to the scheme” in subsection (4), there were substituted the words “ in relation to the relevant section of the scheme ”;

• (d) in subsection (5)—

• (i) in paragraph (a), for the words “in relation to an occupational pension scheme” there were substituted the words “in relation to a section of a segregated scheme”; and

• (ii) in paragraph (b), for the words “in relation to such a scheme” there were substituted the words “in relation to such a section”; and

• (e) after subsection (6), there were inserted the following subsection—

(6A) Where the trustees or managers of a section of a segregated scheme receive a copy of a notice issued by an insolvency practitioner or former insolvency practitioner under subsection (6), they must send a copy of that notice as soon as practicable to the trustees or managers of each section of the scheme (if different) and to all the employers in relation to the scheme.

• (3) Section 123 of the Act (approval of notices issued under section 122) shall be modified in its application to a section of a segregated scheme to which regulation 2 applies so that it shall be read as if, after subsection (4), there were inserted the following subsection—

(4A) Where the trustees or managers of a section of a segregated scheme receive a copy of a determination notice issued by the Board under subsection (4), they must send a copy of that notice as soon as practicable to the trustees or managers of each section of the scheme (if different) and to all the employers in relation to the scheme.

• (4) Section 124 of the Act (Board's duty where there is a failure to comply with section 122) shall be modified in its application to a section of a segregated scheme to which regulation 2 applies so that it shall be read as if—

• (a) for the words “in relation to an occupational pension scheme” in subsection (1), there were substituted the words “ in relation to a section of a segregated scheme in circumstances where the employer is the only employer in relation to that section ”; and

• (b) after subsection (4), there were inserted the following subsection—

(4A) Where the trustees or managers of a section of a segregated scheme receive a copy of a notice issued by the Board under section 122 by virtue of this section, they must send a copy of that notice as soon as practicable to the trustees or managers of each section of the scheme (if different) and to all the employers in relation to the scheme.

• (5) Section 125 of the Act (binding notices confirming status of scheme) shall be modified in its application to a section of a segregated scheme to which regulation 2 applies so that it shall be read as if—

• (a) after subsection (3), there were inserted the following subsection—

(3A) Where the trustees or managers of a section of a segregated scheme receive a notice from the Board under subsection (3) together with a copy of the binding notice, they must send a copy of the notice and the binding notice as soon as practicable to the trustees or managers of each section of the scheme (if different) and to all the employers in relation to the scheme.

; and

• (b) for the words “ceases to be involved with the scheme” in paragraph (b) of subsection (4), there were substituted the words “ ceases to be involved with the relevant section of the scheme ”.

Eligible schemes

4

• (1) Except as otherwise provided in this Part, for the purposes of Part 2 of the Act, except Chapter 4, as it applies in the case of a section of a segregated scheme to which regulation 2 applies, references to “an eligible scheme” shall be read as if they were references to a section of a segregated scheme in circumstances where that section, if it were a scheme, would not be—

• (a) a money purchase scheme; or

• (b) a scheme which is a prescribed scheme or a scheme of a prescribed description under section 126(1)(b) of the Act (eligible schemes).

• (2) Paragraph (1) above shall not apply for the purposes of sections 174 to 181 of the Act (the levies).

Board's duty where application or notification received under section 129

5

• (1) Section 129 of the Act (applications and notifications for the purposes of section 128) shall be modified in its application to a section of a segregated scheme to which regulation 2 applies so that it shall be read as if—

• (a) after subsection (1), there were inserted the following subsection—

(1A) Where the trustees or managers of a section of a segregated scheme make an application to the Board under subsection (1), they must issue a notice to that effect as soon as practicable to the trustees or managers of each section of the scheme (if different) and to all the employers in relation to the scheme.

; and

• (b) after subsection (5), there were inserted the following subsection—

(5A) Where the trustees or managers of a section of a segregated scheme receive a notice from the Board under subsection (5), they must send a copy of that notice as soon as practicable to the trustees or managers of each section of the scheme (if different) and to all the employers in relation to the scheme.

• (2) Section 130 of the Act (Board's duty where application or notification received under section 129) shall be modified in its application to a section of a segregated scheme to which regulation 2 applies so that it shall be read as if—

• (a) after the words “a scheme rescue is not possible” in subsection (2), there were inserted the words “ in relation to the relevant section of a segregated scheme ”;

• (b) after the words “a scheme rescue has occurred” in subsection (3), there were inserted the words “ in relation to that section ”;

• (c) after subsection (4), there were inserted the following subsection—

(4A) Where the trustees or managers of a section of a segregated scheme receive a copy of a notice from the Board under subsection (4), they must send a copy of that notice as soon as practicable to the trustees or managers of each section of the scheme (if different) and to all the employers in relation to the scheme.

• (d) in subsection (5)—

• (i) in paragraph (a), for the words “in relation to an occupational pension scheme” there were substituted the words “in relation to a section of a segregated scheme”; and

• (ii) in paragraph (b), for the words “in relation to such a scheme” there were substituted the words “in relation to such a section”; and

• (e) after subsection (7), there were inserted the following subsection—