United Kingdom Statutory Instruments

(a) in the case of liabilities in respect of pensions or other benefits, on the assumption that the liabilities will be discharged by the purchase of annuities of the kind described in section 74(3)(c) of the 1995 Act (discharge of liabilities: annuity purchase);

(b) subject to sub-paragraph (a), on the general assumptions specified in regulation 3(2)(a) to (c) and (3) of the MFR Regulations (determination, valuation and verification of assets and liabilities: general);

(c) subject to sub-paragraph (a) and paragraphs (2), (3), (5) and (6), in accordance with regulations 4 to 8 of the MFR Regulations (determination and valuation of assets and liabilities);

(d) subject to sub-paragraph (e), so far as the guidance given in GN 27 applies as respects regulations 3(2)(a) to (c) and (3) and 4 to 8 of the MFR Regulations or as respects sub-paragraph (a) and paragraphs (2) and (3) of this regulation, in accordance with that guidance; and

(e) in accordance with the guidance given in GN 19 so far as that guidance applies for the purposes of these Regulations.

    (2) For the purposes of paragraph (1)(a) the actuary must estimate the cost of purchasing the annuities.

    (3) The liabilities of a scheme which are to be taken into account under paragraph (1) include all expenses (except the cost of the annuities referred to in paragraph (1)(a)) which, in the opinion of the trustees or managers of the scheme, are likely to be incurred in connection with the winding up of the scheme.

    (4) Where in these Regulations (or in the MFR Regulations as applied by this regulation) there is a reference to the value of any asset or the amount of any liability being calculated or verified in accordance with the opinion of the actuary or as he thinks appropriate, he must comply with any relevant provision in the guidance given in GN 27 or, as the case may be, GN 19 in making that calculation or verification.

    (5) The value of the assets and the amount of the liabilities of a scheme which are to be taken into account for the purposes of section 75(2) and (4) of the 1995 Act must be certified by the actuary in the form set out in Schedule 1 to these Regulations, but if the scheme is being wound up on the date as at which the valuation is made, the actuary must modify the note at the end of the certificate by omitting the words from "if the scheme" onwards.

    (6) For the purposes of this regulation - 

(a) references in regulations 3(2), 4, 5, 7 and 8 of the MFR Regulations to the relevant date are to be taken as references to the applicable time;

(b) regulations 4(1), 7(1) and 8(2) of the MFR Regulations have effect with the substitution for the words "the minimum funding requirement is met" of the words "the value of the assets of the scheme is less than the amount of the liabilities of the scheme";

(c) regulation 6(1)(b) of the MFR Regulations has effect with the addition at the end of the words "(and any amount treated as a debt due to the trustees or managers of the scheme under section 75(2) or (4) by virtue of the valuation in question)".

(a) the reference in section 75(2)(a) to a time which falls before any relevant event in relation to the employer which occurs while the scheme is being wound up were a reference to a time which falls before relevant events have occurred in relation to all the employers;

(b) the reference in section 75(2) to an amount equal to the difference being treated as a debt due from the employer were a reference to an amount equal to that employer's share of the difference being treated as a debt due from that employer;

(c) the references in section 75(3)(a)(i) and (b) to no relevant event of the kind there mentioned occurring in relation to the employer were references to no event of that kind occurring in relation to all the employers;

(d) the reference in section 75(4)(a) to a relevant event ("the current event") occurring in relation to the employer were a reference to a relevant event or an employment-cessation event occurring only in relation to that employer;

(e) the reference in section 75(4) to an amount equal to the difference being treated as a debt due from the employer were--


(i) in a case where the difference is ascertained immediately before a relevant event occurs in relation to the employer, a reference to an amount equal to the employer's share of the difference being treated as a debt due from the employer; and

(ii) in a case where the difference is ascertained immediately before an employment cessation event occurs in relation to the employer, a reference to an amount equal to the sum of the cessation expenses attributable to the employer and the employer's share of the difference being treated as a debt due from the employer; and



(f) section 75(4)(d) and (e) were omitted.

    (2) For the purposes of paragraph (1), an employer's share of the difference is - 

(a) such proportion of the total difference as, in the opinion of the actuary after consultation with the trustees or managers, the amount of the scheme's liabilities attributable to employment with that employer bears to the total amount of the scheme's liabilities attributable to employment with the employers; or

(b) if the scheme provides for the total amount of that debt to be otherwise apportioned amongst the employers, the amount due from that employer under that provision.

    (3) For the purposes of paragraph (2) - 

(a) the total amount of the scheme's liabilities which are attributable to employment with the employers; and

(b) the amount of the liabilities attributable to employment with any one employer,

(a) any pre-April 1997 participator (see paragraph (7)); and

(b) any person who has ceased on or after 6th April 1997 and before the applicable time to be a person employing persons in the description of employment to which the scheme relates, unless - 


(i) when he so ceased the scheme was not being wound up and continued to have active members; and

(ii) condition A, B, C or D is met.

    (3) Condition A is that no debt was treated as becoming due from him under section 75(2) or (4) of the 1995 Act (or, if he so ceased before 6th April 2005, under section 75(1) of that Act) by virtue of his so ceasing.

    (4) Condition B is that such a debt was treated as becoming due from him and has been paid before the applicable time.

    (5) Condition C is that such a debt was treated as becoming due from him and has not been so paid solely because he was not notified of the debt, and of the amount of it, sufficiently in advance of the applicable time for it to be paid before that time.

    (6) Condition D is that such a debt was treated as becoming due from him but at the applicable time it is excluded from the value of the assets of the scheme because it is unlikely to be recovered without disproportionate cost or within a reasonable time.

    (7) In this regulation "pre-April 1997 participator" means a person who immediately before 6th April 2005 was regarded as an employer for the purposes of the 1996 Regulations by virtue of regulation 6 of those Regulations (ceasing to participate: transitional provision).

(a) subsection (2) - 


(i) provided that if the levy deficit condition is met the levy deficit is to be treated as a debt due from the employer to the trustees or managers of the scheme; and

(ii) was not subject to subsection (3) of that section;



(b) subsection (4) provided that where the criminal reduction conditions are met the criminal deficit is to be treated as a debt due from the employer to the trustees or managers of the scheme; and

(c) subsections (4A) to (4C) and (6) were omitted.

    (2) The levy deficit condition is that an amount payable by way of general levy in respect of any money purchase scheme exceeds the value of the unallocated assets of the scheme either - 

(a) at the time when the amount first becomes payable to the Secretary of State; or

(b) at a later time designated by the trustees or managers of the scheme for the purposes of this paragraph.

    (3) The criminal reduction conditions are that - 

(a) a reduction in the aggregate value of the allocated assets of the scheme occurs;

(b) the reduction is attributable to an act or omission which - 


(i) constitutes an offence prescribed for the purposes of section 81(1)(c) of the 1995 Act; or

(ii) in the case of an act or omission which occurred outside England and Wales or Scotland, would constitute such an offence if it occurred in England and Wales or in Scotland; and



(c) immediately after the act or omission or, if that time cannot be determined, at the earliest time when the auditor of the scheme knows that the reduction has occurred, the amount of that reduction exceeds the value of the unallocated assets of the scheme.

    (4) In this section - 

"allocated assets", in relation to a scheme, means assets which have been specifically allocated for the provision of benefits to or in respect of members (whether generally or individually) or for the payment of the scheme's expenses (and "unallocated" is to be read accordingly);

"the criminal deficit" means the amount of the excess mentioned in paragraph (3)(c);

"the levy deficit" means the amount of the excess mentioned in paragraph (2);

(a) different sections of the scheme apply to members in employment in the United Kingdom and to members in employment outside the United Kingdom ("the United Kingdom section" and "the foreign section");

(b) contributions payable to the scheme in respect of a member are allocated to the section applying to that member's employment;

(c) a specified part or proportion of the assets of the scheme is attributable to each section and cannot be used for the purposes of any other section; and

(d) the United Kingdom section meets the tax condition and the foreign section does not do so.

    (2) If this paragraph applies - 

(a) section 75 of the 1995 Act and these Regulations (apart from this regulation) apply as if each section of the scheme were a separate scheme; and

(b) the reference to the scheme in the form set out in Schedule 1 may be modified appropriately.

    (3) Paragraph (4) applies where - 

(a) a scheme applies to members in employment in the United Kingdom and members in employment outside the United Kingdom;

(b) paragraph (2) does not apply to the scheme; and

(c) part of the scheme meets paragraph (b) of the tax condition by virtue of that part having been treated as a separate scheme under section 611(3) of the Taxes Act that is treated as becoming a registered pension scheme under paragraph 1(1) of Schedule 36 to the Finance Act 2004 by virtue of paragraph 1(2) of that Schedule.

    (4) If this paragraph applies - 

(a) section 75 of the 1995 Act and these Regulations (apart from this regulation) apply as if the approved and unapproved parts of the scheme were separate schemes; and

(b) the reference to the scheme in the form set out in Schedule 1 may be modified appropriately.

    (5) Paragraph (6) applies where - 

(a) a scheme has been such a scheme as is mentioned in paragraph (1) or (3),

(b) the scheme is divided into two or more sections, some or all of which apply only to members who are not in pensionable service under the section;

(c) the provisions of the scheme have not been amended so as to prevent the conditions in paragraph (1) or, as the case may be, paragraph (3) being met in relation to two or more sections; and

(d) in relation to one or more sections of the scheme those conditions have ceased to be met at any time by reason only of there being no members in pensionable service under the section and, in the case of paragraph (1), no contributions which are to be allocated to it.

    (6) If this paragraph applies - 

(a) section 75 of the 1995 Act and these Regulations (apart from this regulation) apply as if any section in relation to which those conditions have ceased to be met were a separate scheme; and

(b) the reference to the scheme in the form set out in Schedule 1 may be modified appropriately.

    (7) Before 6th April 2006 paragraph (3) applies with the substitution for sub-paragraph (c) of the following paragraph - 

" (c) part of the scheme meets paragraph (a) of the tax condition by virtue of section 611(3) of the Taxes Act."

(a) for "relevant insolvency event" substitute "relevant event"; and

(b) for "same meaning as in section 75" substitute "meaning given in section 75(6A)".

    (3) In regulation 13 (duty to obtain minimum funding valuations: section 75 debts in multi-employer schemes) - 

(a) in paragraph (1) for "section 75(1)" substitute "section 75(2) or (4)"; and

(b) in paragraph (3) for "has the same meaning as in section 75(3)" substitute "means the time as at which the value of the assets of a scheme and the amount of its liabilities are to be determined, calculated and verified for the purposes of section 75".

    (4) In regulation 19 (records) in paragraph (3)(c) for "section 75(1)" substitute "section 75(2) or (4)".

    (5) In Schedule 4 (methods of securing shortfall in cases of serious underprovision) - 

(a) in paragraph 1(1) for the definition of "section 75(1) shortfall" substitute - 

" "section 75 shortfall", in relation to a scheme, means so much of the amount treated by section 75(2) or (4) as a debt due from the employer to the trustees or managers at the applicable time (as defined in regulation 2(1) of the Occupational Pension Schemes (Employer Debt) Regulations 2005), as is attributable to the value of the scheme assets falling short of the amount of the scheme liabilities by more than 10 per cent;"

(b) for "section 75(1) shortfall", wherever else it occurs, substitute "section 75 shortfall";

(c) in paragraphs 1(2), 2(2)(a), 3(3)(a), 4(2)(b) and (4) for "relevant insolvency event" substitute "relevant event".

The Occupational Pension Schemes (Winding Up) Regulations 1996

     2. In regulation 10(2) of the Occupational Pension Schemes Winding Up Regulations 1996 for "relevant insolvency event" and "subsection (4) of section 75 (definition of relevant insolvency events)" substitute "relevant event" and "subsection (6A) of section 75 (definition of relevant events)" respectively.