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Govt mulls easing multi-employer pension scheme rules

The Government is considering loosening the rules around how employers in multi-employer pension schemes address pension debt.

Employers are calling for a change to how pension deficits are assigned when a sponsor of a non-associated multi-employer scheme becomes insolvent or winds the scheme up.

Currently, when an employer triggers ‘section 75’ debt, it is responsible for paying its share of the overall scheme’s defined benefit deficit, the difference between the assets and liabilities measued on a buyout basis.

The debt can be triggered by the scheme winding up, the employer becoming insolvent or when there are no more active members in the scheme.

However, some employers and schemes want to preserve the existing system and warn the risk to employers could increase if requirements are eased.

Yesterday, the Department for Work and Pensions issued a call for evidence on suggestions for changes to how debts can be repaid, what constitutes a triggering event, and how debts are calculated.

CBI employment and skills director Neil Carberry says: “About five years ago Government did a small package of reform in this area which did move us forward but didn’t resolve all the issues.

“CBI members still think there’s more to do, particularly so that multi-employer rules apply to genuine multi-employer schemes. These are difficult issues because you don’t want to create opportunities for people to get out of liabilities, but it’s useful to have another discussion.”

The consultation closes on 22 May 2015.

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