Participation of new employer in a scheme
Produced in partnership with Blake Morgan LLP

The following Pensions practice note produced in partnership with Blake Morgan LLP provides comprehensive and up to date legal information covering:

  • Participation of new employer in a scheme
  • Purpose of participation
  • Reason for participation
  • Who may participate?
  • Duration of participation
  • Definitive deed and rules: the enabling power
  • Definitive deed and rules: other considerations
  • The trustees
  • The new participating employer
  • Reporting requirements
  • More...

Participation of new employer in a scheme

Purpose of participation

The purpose of admitting a new employer to participate in a scheme is to extend the benefits of that scheme to the relevant employees of the new employer.

Reason for participation

An employer may wish to participate in a scheme for a number of reasons. For example:

  1. it has recently been acquired by an existing scheme employer;

  2. following a business reorganisation employees have transferred to it from another employer that already participates in the scheme; or

  3. it may wish to change the pensions arrangements available to its employees (for example, an employer closes its defined benefit scheme to new members and wishes to participate in another group defined contribution arrangement).

Who may participate?

The provisions of a scheme’s governing documentation will determine who may become a participating employer in any given scheme.

Before 6 April 2006, only employers associated with the scheme’s principal employer were permitted to participate in the scheme, unless HMRC agreed. This is no longer an over-arching restriction. However, it may still be a requirement under the scheme’s governing documentation.

Duration of participation

An employer will usually participate in a scheme until one of the following events occurs:

  1. the last of its employees leaves service or retires

  2. a business re-organisation takes place whereby all of its employees transfer to a new company

  3. it is sold outside of a group

Popular documents