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.

Download PDF