The UK's Pensions Regulator has published guidance for multi-employer schemes, outlining actions that need to be taken in the event of an employer withdrawing from such a scheme.
Since September 2005, employers wishing to withdraw from a multi-employer scheme have had to fund any remaining debt on a full buy-out basis – the amount it would cost to buy out the members’ benefits by purchasing annuities. This gives members greater protection should an employer stop participating in a pension scheme.
However, employers can modify their share of the debt owed to the scheme by entering into an arrangement with the trustees and the guarantor to guarantee part of the debt – this is a withdrawal arrangement. They must gain approval from the Pensions Regulator for this arrangement.
The regulator’s guidance sets out how, and in what circumstances employers can apply for a withdrawal arrangement, focusing on what will be required from employers and what the regulator will consider in granting approval.