Alerts

Focusing on breaking news

• Whose debt is it anyway?

  If a company exits an underfunded multi-employer defined benefit (DB) scheme (the cessation employer), its share of the deficit becomes a debt due to the trustees (the employer debt). Since September 2005, the employer debt has been calculated on the buy-out basis. Coupled with rising deficits in DB schemes, this increase in the level of potential debt has meant that the ability to shift responsibility for an employer debt (for instances, on a group re-organisation or sale) is critical to the smooth running of schemes. Increasingly, the Occupational Pension Schemes (Employer Debt) Regulations 2005 have been seen as inflexible and out of step with these new pressures. Draft amendments were therefore published for consultation in August 2007. Finally, after prolonged negotiation behind the scenes, the Amendment Regualtions were laid on 14 March and come into force on 6 April 2008.

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• IDRP - the new arrangements

  From 6 April 2008, the option of having a simplified single stage internal dispute resolution procedure (IDRP) will become a reality, although trustees can stick with their current two-stage IDRP if they wish. Representing a move away from the prescriptive two-stage IDRP required by the Pensions Act 1995, the amended provisions will leave it largely up to scheme trustees to design a process for dealing with pension disputes which is appropriate for their scheme (provided certain "framework" requirements are met). Transitional provisions will apply, so any "disagreement which is ongoing" before 6 April 2008 should be dealt with under the scheme's current two-stage IDRP. The final Regulations were laid before Parliament this week and come into force on 6 April. Although the final code of practice has not yet been laid, the Pensions Regulator issued a response to consultation in February 2008 which clarified its intention on reasonable periods.

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• Budget 2008 - what's in it for pensions?

  The Chancellor, Alistair Darling, delievered his first Budget on Wednesday 12 March 2008. In terms of pensions, the additional tax simplification measures announced largely reflect the 2007 pre-Budget Report. Although the Budget summarises the key changes, much of the detail will follow in the Finance Bill 2008.

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• Conflicts guidance - a high five from the Regulator

  With the primary objective of promoting "good scheme governance arrangements", the Pensions Regulator's long awaited draft guidance on "Conflicts of Interest" has finally been published for consultation. Recognising the fact that trustees often have "some kind of stake" in either the scheme or the sponsoring employer, the draft guidance is aimed at the trustees of all occupational pension schemes. Long and detailed, the draft guidance consolidates, and builds on, existing guidance on conflicts in other Pensions Regulator publications, such as the Code of Practice on Scheme Funding.

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• PPF risk-based levy - 2008/09 determination

  The Pension Protection Fund (PPF) was established in April 2005 to provide compensation for members of eligible schemes where benefits cannot be paid in full because: (a) there has been an insolvency event in relation to the employer; and (b) the scheme is underfunded on winding-up. Compensation is funded partly by the assets of the schemes for which the PPF assumes responsibility, and partly by an annual levy raised from potentially eligible schemes. The overall levy is made up of two parts - the scheme-based and risk-based levies. Each year the PPF is required to publish a determination setting out the methodology for calcuating the levy. The 2008/09 levy determination was published on 19 February 2008. The determination confirms the aim of promoting a stable levy estimate - the total levy for 2008/09 will be £675 million (the same as for 2007/08).

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• Trustees and the new anti-money laundering regime

  Changes made to the UK anti-money laundering regime from 15 December 2007 require trustees and directors of a corporate trustee who are providing their services "by way of business" to comply with certain anti-money laundering requirements. Trustees who fall outside this definition are excluded from the regime. There are tough penalties for failure to comply with the anti-money laundering regime. For instance, a civil penalty could be imposed on a trustee (or director) who fails to put in place adequate anti-money laundering systems or who fails to report a suspicious transaction.

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