Do you know who your “statutory” employers are?

Däna Burstow

If you are filling out your scheme return from November 2011 you will need to answer the question “who is your statutory employer?” 

You might think that this is an old question – for example, on the previous scheme return you had to include those employers which are participating in the scheme.  But no, the question is asking something different which has not been asked for before.  And sadly the answer for many schemes is not easy.  There are different definitions of employer for the purposes of scheme rules, any debt due in the event of winding up, the obligation to comply with funding requirements and also when assessing entry to the Pension Protection Fund. 

Part of the reason for requiring schemes to think about this is because of situations which have arisen where people have paid PPF levies and then on insolvency discovered that the scheme is not eligible for entry to the PPF because there is no statutory employer.  Imagine being told you can have a return of your levy but the PPF won’t help you further than that!

The information needed to analyse this question will include historic information about employers, when they stopped contributing to the scheme and also when they stopped having employees.  That information might take a while to gather and it is likely that legal advice will be needed unless you fancy trawling through multiple sets of regulations and case law.  Any scheme return due from November onwards needs the answer so it is something to crack on with. 

Now I am not one for doing things for form’s sake.  But this is one of those circumstances when the legal analysis is complicated, as well as the facts, but the reasons for getting it right are very good indeed.  The question on the scheme return might be the trigger, but understanding the role that companies play in relation to the pension liabilities is fundamental to knowing where you stand. 

Trustees will want to understand the background better and to help them the Pensions Regulator has launched an e-learning tool which it would be worth spending a few minutes on.  http://www.thepensionsregulator.gov.uk/doc-library/biteSized/StatutoryEmployer/index.htm is the link.

 Däna Burstow is a partner at Allen & Overy LLP.

Comments published on Pensions Talk do not necessarily reflect the views of Allen & Overy or its clients.

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