The DWP has issued for consultation draft regulations, the Occupational Pension Schemes (Employer Debt) (Amendment) and Pension Protection Fund (Multi-employer and Entry Rules) (Amendment) Regulations 2007, which will change the way in which statutory debts are calculated when an employer ceases to participate in a multi-employer occupational pension scheme.
The key proposed changes are: changing the definition of "employment cessation event" so that a debt will arise whenever an employer stops employing active members of the scheme (albeit there will be a 12 month period of grace where an employer expects to employ an active member within that period); introducing five possible bases for apportioning the deficit arising; giving trustees a greater say in the value of assets and liabilities used in the calculations; and giving actuaries greater flexibility in terms of estimating the cost of buying out benefits. The draft regulations will also close a loophole whereby an employer providing DC benefits could become liable for part of any DB deficit. There are various proposed consequential amendments to the current regulations and other pensions legislation.
There are issues with the draft amending regulations, but hopefully most of these can be resolved as part of the consultation exercise. The proposal that debts will arise on employers, even if they all cease to employ active members at the same time, will be of particular concern to scheme sponsors. It could also be argued that there is already sufficient flexibility in the current regulations for apportionments and that these draft regulations simply increase regulation on pension schemes at a time when Government policy is all about de-regulation. That said, the draft regulations provide a useful framework for various types of apportionment arrangements. Corporates involved in or planning transactional or restructuring activity now or in the near future will need to have careful regard to the possible impact of the draft regulations (particularly the numerous calculation bases available). At the same time, trustees must not forget to pay attention to what their scheme rules say should happen when an employer ceases to participate in their scheme.
The closing date for responses to the consultation is 1 October 2007 and it would appear that the DWP intend to implement the new regulations in December 2007.
The consultation can be viewed at: http://www.dwp.gov.uk/publications/dwp/2007/occ-pen-consult/occ-pen-emp-debt.pdf
DWP Publishes Consultation Paper On The Occupational Pension Schemes (EEA States) Regulations 2007
On 31 July 2007, the DWP published a consultation paper seeking views on the draft Occupational and Personal Pension Schemes (EEA States) Regulations 2007. The closing date for responses is 24 September 2007.
The Regulations follow the incorporation on 7 July 2006 of the Occupational Pensions Directive (also known as the Institution for Occupational Retirement Pension or IORP Directive), into the European Economic Area (EEA). The Directive provides a framework for the operation and supervision of occupational pension schemes in the EU. It has previously been in effect in EU states since 23 September 2005. As a result of this incorporation, the Directive entered into force in Norway, Iceland and Liechtenstein on 12 April 2007.
The extension of the Directive to EEA states means that amendments now have to be made to some UK pensions legislation, to ensure that UK legislation recognises the Directive’s application to EEA states as well as EU states. The draft regulations therefore seek to amend the relevant UK legislation.
Communities And Local Government Issues Consultation Paper - A Framework For Fairness: Proposals For A Single Equality Bill For Great Britain
In early 2005, the Discrimination Law Review was established to assess how the discrimination legislative framework in the UK, which has developed over many years and is set out in many different places (e.g. in Acts and Regulations), could be streamlined and simplified to ensure a clear and modern approach to equality and diversity.
In light of the Discrimination Law Review, Communities and Local Government has issued a consultation paper which recognises that there is a need to simplify the law to enable a greater understanding of discrimination law, to create more effective law in order to help tackle areas of discrimination, inequality and disadvantage which remain in today’s society and to modernise the law in light of dramatic changes in society over recent decades.
The paper sets out and seeks views on the Government’s proposals for a Single Equality bill for Great Britain, which would tackle the three key areas above, simplifying the law as far as possible. It also sets out certain areas where differential treatment will remain lawful, including in relation to pensions, fixing ages for entry into occupational pension schemes and the provision of benefits, and setting limits for the state pension age.
The consultation period runs until 4 September 2007.
Reforms To The Internal Dispute Resolution Procedure ("IDRP") provisions
The Pensions Act 2004 originally proposed to make changes to the IDRP provisions contained in the 1995 Pensions Act, but after lobbying by various parties within the pensions industry (us included) those provisions were not brought into force. However, the Pensions Act 2007 introduces amendments to the IDRP requirements, which will be enacted as a new section 50 of the Pensions Act 1995.
The essence of the changes is that, whilst trustees of occupational pension schemes must still have in place arrangements for resolving any disputes that arise under their scheme, they will be able to deal with such disputes in either a one-stage or two-stage process. Currently, the procedure must include a two stage internal process.
If a two-stage process is retained, the dispute may not then be referred to the trustees until a "specified person" has considered it, and that person has made a decision. A "specified person" will be any person who is described in the dispute arrangement put in place by the scheme.
The changes are due to come into force on 26 September 2007.
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