Statutory employer issues—problems in practice

The following Pensions practice note provides comprehensive and up to date legal information covering:

  • Statutory employer issues—problems in practice
  • Meaning of statutory employer
  • Importance of identifying statutory employers
  • Legal definition
  • Meaning of 'persons in the description or category of employment to which the scheme relates'
  • Substitution of principal employer
  • Will the departing PE cease to be a statutory employer?
  • Will the new PE become a statutory employer?
  • Substitution of principal employer in a single-employer scheme
  • First limb of the two-stage test
  • More...

Statutory employer issues—problems in practice


A scheme's statutory employer is an employer legally responsible for:

  1. meeting the scheme-specific funding objective

  2. paying any section 75 debt triggered in relation to the scheme

  3. triggering entry into a Pension Protection Fund (PPF) assessment period

There are circumstances which may give rise to uncertainties as to whether an employer is or is not a statutory employer, or even create risks that a scheme is left without statutory employers:

  1. where the principal employer of a defined benefit (DB) scheme is substituted with a new principal employer

  2. on a scheme merger

  3. where a scheme's employer is a defined contribution (DC) employer who is only responsible for DC members

This Practice Note considers these three areas in detail.

Meaning of statutory employer

The Practice Note Who is the statutory employer? goes into some detail about the legislative definitions of statutory employer, the Pensions Regulator's stance on statutory employers and the process to follow to identify a scheme's statutory employer(s). To summarise the key points briefly:

Importance of identifying statutory employers

Since November 2011, scheme trustees are required to disclose the identity of their statutory employers (as opposed to their participating employers) on their annual scheme return and keep that information updated. The Pensions Regulator has also made it clear that it expects scheme trustees to make sure

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