UK - The government has launched a consultation on plans to relax rules which force firms winding up a pension scheme as part of a corporate restructure or demerger to fully cover liabilities.
It said the proposals on the Section 75 rules follow on from an informal consultation started last November (Global Pensions; November 12, 2008) - and follows concerns that the rules stand in the way when businesses restructure.
Minister for pensions and the ageing society Angela Eagle said: "We want to help legitimate business activity without undermining protection of employees' pensions.
"We need to get the balance between flexibility for employers and protection for employees, which is why we have been discussing our proposals with a range of interested parties, including the TUC and the CBI.
"We estimate our main proposal could help up to 50% of corporate restructurings. I look forward to seeing the market response to this consultation."
The department for work and pensions said the proposals would mean an end to employers in well run multiple employer schemes being required to meet a debt if they were planning to restructure - provided prescribed circumstances and conditions are met.
It said the changes would not apply where a multi-employer scheme winds up - or if the employer experiences an insolvency event.
The DWP said, In these situations, the existing employer debt rules would continue to protect members' benefits.
The DWP said it has also proposed a number of other technical amendments to make the existing employer debt regulations work better in practice.
Sacker & Partners associate Stuart O'Brien said the proposed easements were welcome additions to the employer debt legislation - but warned they would not help in all cases.
He said: "I can't help wondering whether adding an extra and highly prescriptive layer on top of an already complicated piece of legislation is really the best approach. The suggested new provisions have numerous hoops to jump through and not all reorganisations will make it through.
"In fact the ability for one employer to assume the underlying pension liabilities attributable to another employer on reorganisations was already largely there in the existing regulations in the guise of scheme apportionment arrangements.
"However, instead of building on that mechanism (and ironing out some of the wrinkles), the proposed amendments now seek to prevent scheme apportionment arrangements from being used to reallocate underlying liabilities in this way.
"No doubt the final regulations will look very different from the current draft, but the key will be to ensure that easements in some areas do not result in retrograde steps in others."
The consultation period runs until November 19. The consultation document is available on the DWP's website at http://www.dwp.gov.uk/consultations/2009/
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