Debts & Loans

Eversheds has written to the department for work and pensions to highlight "inconsistencies and practical problems" with employer debt regulations.

The law firm said it has encountered several issues with the regulations when advising its clients.

The regulations govern the payment of Section 75 debts, which arise when an employer leaves a multi-employer defined benefit pension scheme.

The regulations were updated in April, to try to resolve certain problems that had been identified with the previous version and to give employers greater flexibility.

However, Eversheds lawyers said they have identified several difficulties. These include the fact that some firms of actuaries are refusing to sign off Section 75 debt certificates due to errors in the standard form certificate contained in the regulations.



The law firm said this issue needs to be resolved as a matter of urgency, because otherwise trustees may find themselves in a position where they are unable to value or recover Section 75 debts that are due from their scheme’s sponsoring employers.

There is also uncertainty over when a debt arises. Under the latest set of regulations, a Section 75 debt is payable when an employer ceases "to employ at least one person who is an active member of the scheme" where at least one other employer continues to do so.

There is also "real uncertainty" about the scope of the term "active member of the scheme".

Eversheds head of pensions Anthony Arter said: "The new employer debt regulations were designed to make life easier for employers by giving them more flexibility.

"However, there are a number of issues that need to be addressed in order to make that goal a reality. We understand that the DWP is reviewing the effectiveness of the new regulations and hope they will take immediate action to rectify these issues".