UK - The Department of Work and Pensions (DWP) has clarified that triggering employer debt is only intended to prevent scheme abandonment.

Following the end of the consultation period for views on employer debt, the DWP has reacted to frequently voiced criticism of Section 75 of the 1995 Pensions Act, which requires employers to pay into schemes when they are wound up.

"It was not the intention to affect legitimate scheme mergers or transfers, or to trigger a 'Section 75' debt when a company closes its scheme to future accruals, whilst continuing to fund the scheme," the DWP said in a statement.

Last month Jane Kola, a pensions solicitor at Wragge & Co pointed out at an NAPF conference that Section 75 "also applies in cases where several companies want to put together their pension fund into one scheme, which counts as partial wind-up as well".

The DWP did not specifically say it will amend this part of the legislation. However, it noted: "We will review the draft regulations in light of all comments coming out of the consultation".

However, Punter Southall said it expects the regulations to be amended given the fact that the department has issued this statement.

Meanwhile, the DWP has also issued a consultation paper on flexible retirement.

Interested parties have until December 7 to file their views on problems of age discrimination and other issues arising from flexible retirement.

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