Employer debt regulation amendment pushed back to December

The Department for Work and Pensions has delayed the introduction of amendments to the Employer Debt Regulations until December, it has announced.

In June, the DWP issued a consultation on draft legislation, including the latest round of proposed changes to the Occupational Pension Schemes (Employer Debt and Miscellaneous Amendments) Regulations 2011, in which it said the amendments were planned to take effect on 1 October, this year.

However, yesterday the department issued a statement for its new one-in one-out strategy for reducing regulation in which it said amendments to the Employer Debt Regulations would in fact be implemented in December this year.

The DWP confirmed to PP there is a delay from the original October date.

A DWP spokesperson said: "The government is carefully considering the responses to the consultation on draft regulations on Employer Debt (Section 75 of the Pensions Act 1995). The new regulations will be introduced as soon as possible after October 2011."

Sackers partner Zoe Lynch (pictured) noted traditionally, bar a few instances, the DWP tends to pass legislation on either 6 April or 1 October - and the latter date is just four days away.

She said: "The government has a commitment it won't bring in any pensions legislation into force except on 6 April and 1 October - you would expect if they wanted to do it this side of Christmas you would expect 1 October.

"Flexible apportionment arrangements will be quite handy for people so if they [DWP] miss the date for 1 October they don't really want to make everyone wait until 6 April."

Flexible apportionment arrangements were proposed in the DWP's consultation as a new option for dealing with an employer debt in a multi-employer defined benefit scheme.

Under the arrangement, provided certain conditions are met, it will be possible to use an FAA in any circumstances, not just a corporate restructuring and no debt will be triggered.

In addition the amendments will mean trustees will have discretion to extend an employer's ‘period of grace', which allows an employer to cease employing an active member of the pension scheme temporarily without triggering a debt, up to a maximum of 36 months.

The DWP estimated the amendments will save business £27m per year, but it also anticipates implementation of regulation next year which will add regulatory costs to business - but it will aim to ensure that the cumulative one-in, one-out balance remains in credit.