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What is a statutory employer?
Broadly, an employer is a statutory employer in relation to a defined benefit pension scheme if it employs, or has in the past employed, active members or people eligible to become active members of the scheme and its liability to the scheme has not been discharged. It is important to take advice to identify all such employers as employers that have ceased to participate in the scheme and left the employer group can still be liable to support the scheme if they are not properly discharged under the scheme rules and legislation.

How is a pension scheme valued?
The funding position of a scheme is the difference between the current value of its assets and its liabilities. Different methods can be used to measure the liabilities including buy-out/section 75, (the cost of ‘buying out’ the scheme with an insurance company), technical provisions (the amount needed to pay promised benefits as they arise), PPF/section 179 (the amount needed to meet the level of compensation offered by the Pension Protection Fund) and the accounting method (prescribed by accounting standards to allow for the comparison of liabilities between different companies). Different methods are used for different purposes and produce different results.

Why are conflict issues important?
There may often be a conflict between the trustees’ interest in protecting members’ benefits and the employer’s interest in keeping the costs of the scheme down. Conflicts of interest can become acute where anyone senior from a sponsoring employer is also a trustee. The Pensions Regulator views the management of conflicts of interest as being key to good scheme governance and expects conflicts to be identified, monitored and managed. Not doing so can affect the validity of decision-making. The Pensions Regulator expects trustees to seek legal advice where material conflicts are identified to help ascertain the best way to manage or avoid them.