Flexible apportionment arrangements
Produced in partnership with Kate Richards and Chris Ransom of CMS
Flexible apportionment arrangements

The following Pensions guidance note Produced in partnership with Kate Richards and Chris Ransom of CMS provides comprehensive and up to date legal information covering:

  • Flexible apportionment arrangements
  • Terminology inserted—leaving and replacement employers
  • Key features
  • Conditions
  • Timing
  • Funding test
  • Scheme apportionment v flexible apportionment
  • Amendment to the rules required?
  • Trustee costs
  • Notifiable event
  • more

THIS PRACTICE NOTE APPLIES TO OCCUPATIONAL DEFINED BENEFIT PENSION SCHEMES THAT ARE SUBJECT TO EMPLOYER DEBT REQUIREMENTS

Since 27 January 2012, it has been possible to enter into a flexible apportionment arrangement to either:

  1. avoid triggering an employer debt under the Pensions Act 1995, s 75 altogether (for more information on s 75 debts (also known as employer debts), see Practice Note: When is a section 75 debt triggered?, or

  2. reduce the amount which may become payable if an employer leaves a multi-employer scheme (or otherwise ceases to employ active members)

Flexible apportionment arrangements do not replace the other mechanisms available to address an employer debt, eg scheme apportionment arrangements or the corporate restructuring easements. However, flexible apportionment arrangements cannot be used where the scheme has entered insolvency or winding up.

As flexible apportionment arrangements were introduced primarily to assist employers in circumstances where several of them cease to employ active members in the same scheme at broadly the same time in corporate restructuring scenarios, their use is preferred over the corporate restructuring easements which are far more prescriptive in their nature.

For more information on scheme apportionment arrangements, see Practice Note: Apportionment arrangements — Scheme apportionment arrangements.

For more information on the corporate restructuring easements, see Practice Note: Group restructurings and section 75—the general and de minimis easements.