Employers ceasing to participate in an underfunded multi-employer DB scheme: new employer debt requirements

The current employer debt regime has proved problematic and inflexible. In August 2007, the Department for Work and Pensions consulted on sweeping amendments. Regulations setting out the new regime which comes into force on 6 April 2008 have been published. In summary these regulations:

• Clarify what events trigger an employer debt.
• Confirm the new default method for calculating an employer's share of the debt and offer help in deciding how to attribute liabilities between employers.
• Set out ways in which employer debts may be reduced by using apportionment rules or a new form of withdrawal arrangement.
• Set out additional notifiable events.

However, there is no radical change to the employer debt regime. Further consultation is expected on this.

To find out more about the finalised regulations, read Wragge & Co's analysis. For details of some of the developments leading to the current proposals please see our earlier alerts:

• January 2007: "Apportionment of employer debts: L v M Ltd"
• May 2007: "Regulator's guidance on abandonment of DB schemes"
• August 2007: "Employers ceasing to participate in multi-employer schemes: draft amendments to employer debt requirements"