Group restructurings and section 75—the general and de minimis easements
Produced in partnership with Kate Richards and Chris Ransom of CMS
Group restructurings and section 75—the general and de minimis easements

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:

  • Group restructurings and section 75—the general and de minimis easements
  • The exiting and receiving employer
  • The general easement
  • The de minimis easement
  • What liabilities are to be taken into account?
  • Six-year look back period
  • Meeting the trustees’ costs
  • Easements—too prescriptive?
  • For further information, see:

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

Corporate restructurings can frequently give rise to an employment cessation event, for example, where transfers of employees between group companies or significant redundancies take place as part of the exercise. An employer debt under section 75 of the Pensions Act 1995 can therefore be triggered, which could defeat the purpose of the group reorganisation (invariably to save money for the group and/or to improve its financial sustainability).

For more information on ‘employment cessation events’, see Practice Note: When is a section 75 debt triggered? — An employment cessation event occurs in a multi-employer scheme

Two easements from the employer debt requirements were introduced in April 2010 under the Occupational Pension Schemes (Employer Debt and Miscellaneous Amendments) Regulations 2010, SI 2010/725:

  1. the general easement

  2. the de minimis easement

Both easements are available to employers undertaking group restructuring exercises.

If a corporate restructuring qualifies for either easement, it will not constitute an employment cessation event and therefore no employer debt will be triggered.

However, both easements are highly prescriptive and a detailed series of steps must be completed in the correct order before an exiting employer can take advantage of them. In addition, neither easement can be used where the employer is insolvent.

The statutory requirements for both easements are set