The following Pensions guidance note provides comprehensive and up to date legal information covering:
THIS PRACTICE NOTE APPLIES TO MULTI-EMPLOYER DEFINED BENEFIT OCCUPATIONAL PENSION SCHEMES
This Practice Note looks at relevant transfer deductions, in particular their legislative framework, how they are calculated and any difficulties which may arise in practice.
Relevant transfer deductions can only apply in circumstances where a statutory debt (known as a section 75 debt) is triggered on a participating employer of a multi-employer pension scheme under the Pensions Act 1995, ss 75-75A and the Occupational Pension Schemes (Employer Debt) Regulations 2005, SI 2005/678 (together, the Employer Debt Legislation). This will be the case, for instances, where an employment-cessation event occurs, ie where a participating employer ceases to employ active members at a time when another participating employer employs at least one active member.
The section 75 debt triggered on the participating employer of a multi-employer scheme (referred to in this Practice Note as the departing employer) is equal to the proportion of the total scheme funding deficit (calculated on a buy-out basis) that represents the share of scheme liabilities attributable to employment with the departing employer. That share is referred to in legislation as the departing employer's liability share.
Where a relevant transfer deduction applies, it serves to reduce that liability share. For more information, see What is a relevant transfer deduction? below.
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