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PLSA welcomes DWP consultation on occupational pension schemes

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The Pensions and Lifetime Savings Association (PLSA) has welcomed the Department of Work and Pensions’ (DWP) consultation on occupational pension schemes.

Joe Dabrowski, head of investment and governance, Pensions and Lifetime Savings Association, says: “While at first glance, section 75 employer debt in non-association multi-employer defined benefit (DB) pension schemes might seem to be a minor technical point; this consultation is vital. This issue impacts on some of the UK’s largest DB schemes as well as being a particular concern for many charities participating in multi-employer schemes.
 
“Under the current regime, companies that do not wish to maintain active membership in the scheme (for example as they have chosen to stop offering defined benefits pensions) are forced to do so unless they are able to pay the Section 75 employer debt. While this may not be a problem for some organisations, for others this might mean being threatened by insolvency if they ceased active membership. The proposals could make the system more sustainable by allowing employers to better manage their risks – in the same way that employers participating in single employer schemes can.
 
“However, there is little question that in a non-associated multi-employer scheme a departing employer must cover its liabilities to the scheme. So we will need to look carefully at the details of the proposed changes to ensure that the right balance of member protection and employer flexibility is achieved. The strength of the ongoing relationship between employers and the scheme is essential to ensuring this.”

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