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Appendix C: Definitions

The following terms, which are in bold in the text, are defined below.   Please note that depending on the context of their use the single may also include the plural and the plural the single.
  • Act: means the Pensions Act 2004.
  • Applicant: means those seeking a clearance statement as an applicant named in the application.
  • Application: is an application made for a clearance statement under:
    • s42 of the Act in respect of the regulator’s power to issue a contribution notice; or
    • s46 of the Act in respect of the regulator’s power to issue a financial support direction.
  • Approved withdrawal arrangement: is an approved withdrawal arrangement under the Occupational Pension Schemes (Employer Debt) Regulations 2005 (SI 2005/678) (as amended), which does require regulator approval.
  • Associated: has the same meaning as in s435 of the Insolvency Act 1986.  See also paragraphs 197 to 204.
  • Assessment period:  is the period after a qualifying insolvency event has occurred in relation to an employer of an eligible scheme, during which the PPF will assess whether or not it must assume responsibility for the scheme. See s132 of the Act.
  • Civil partner: includes former civil partner and reputed civil partner.
  • Clearance: is a term used to describe the voluntary process of obtaining a clearance statement from the regulator.
  • Clearance statement: is statement that, in the regulator’s opinion and in the circumstances described in the application, it would not be reasonable to impose, on the applicants, any liability under a contribution notice or the requirements of a financial support direction, all in relation to a scheme and a particular event. The form of the clearance statement will depend upon whether it is sought in respect of a contribution notice, a financial support direction or both.  See also paragraphs 139 and 157 to 159.
  • Connected: has the same meaning as in s249 of the Insolvency Act 1986.  See also paragraph 196.
  • Contribution notice: require payments to be made to the scheme by employers or connected or associated persons and the term has the same meaning as in s38 of the Act.  See also paragraphs 182 to 186.
  • Detrimental event: is an event that could be detrimental to the ability of the scheme to meet its liabilities as well as some events that are directly detrimental to members’ benefits.  See also paragraph 26.
  • Directly affected party: is a person appearing to the regulator to be directly affected by the regulatory action under consideration.
  • Employer: is, as the context requires, an employer of persons in the description of employment to which the scheme in question relates for the purposes of the contribution notices and financial support directions as defined by s318(1) of the Act and as may be extended under s318(4) of Act , or an employer for any of the purposes referred to in paragraphs 165 to 169.  See also paragraph 21.  Also, in the case of a multi-employer scheme, where this guidance refers to the ‘employer’, this should be taken to include all employers.
  • Employer-related event: is an event in respect of an employer.  See also paragraphs 31 to 62.
  • Employer covenant: is measured by the employer’s legal obligation to the scheme and its financial position (both current and prospective).  See also paragraphs 33 to 35 and Appendix A.
  • Event: includes transactions, agreements, decisions, other acts and failures to act.
  • Financial position: is the employer’s financial standing and prospects (both current and prospective).  See also paragraphs 174 to 176.
  • Financial support direction: require financial support to be put in place for the scheme by employers or connected or associated persons and the term has the same meaning as in s43 of the Act.  See also paragraphs 187 to 195.
  • Fixed charge: is a charge either over ascertainable and defined assets or assets capable of being ascertained and defined that prevents those assets from being dealt with free from the charge without the consent of the chargee. 
  • Floating charge: is a charge over a class of present or future assets that allows those assets to be dealt with in the usual course of business until it becomes a fixed charge or crystallises upon the occurrence of an event or satisfaction of a condition.
  • FRS17/IAS19: are current accounting standards for retirement benefits, the primary objective of which is to ensure that a company’s statutory financial statements reflect, at fair value, the assets and liabilities attributable to the employees' retirement benefits entitlement and any related funding. The FRS17/IAS19 deficit will be the amount reported in the latest available audited statutory accounts, unless the trustees and the employer agree that an updated amount is appropriate.
  • Husband: includes former husband and reputed husband.
  • Insufficiently resourced: has the same meaning as in s44 of the Act  See also paragraphs 192 and 193.
  • Legal obligation: is any legislative, contractual, trust based or other legal requirement (both current and prospective) imposed upon a person in relation to a scheme’s funding.  See paragraphs 165 to 173.
  • Notifiable events: are events in respect of either a PPF eligible scheme or its employer which must be reported to the regulator in accordance with s69 of the Act.  See also paragraph 115.
  • Ongoing deficit – is the funding shortfall revealed in a valuation undertaken under the scheme’s trust deed and rules.
  • PPF: is the Pension Protection Fund.
  • Person: may be an individual, a company, or a partnership, including a limited liability partnership. Its application will depend upon the context.
  • Regulated apportionment arrangement: is a regulated apportionment arrangement under the Occupational Pension Schemes (Employer Debt) Regulations 2005 (SI 2005/678) (as amended), which requires regulator approval.
  • Relative: has the same meaning as in s435 of the Insolvency Act 1986 and is an individual's: brother; sister; uncle; aunt; nephew; niece; lineal ancestor; or lineal descendant (treating any relationship of the half blood as being a relationship of the whole blood and the stepchild or adopted child of any person as his or her child, and an illegitimate child as the legitimate child of his or her mother and reputed father).
  • Relevant deficit: only applies in relation to employer-related events and is any deficit revealed by the comparison of the scheme’s assets with its liabilities, calculated in accordance with the appropriate basis as detailed in paragraphs 48 to 55.
  • Scheme:  is, for the purpose of contribution notices and financial support directions, an occupational pension scheme, but does not include a scheme that only provides money purchase benefits or is exempt from contribution notices and financial support directions as prescribed under s38(1)(b) and s43(1)(b) of the Act respectively.  Other statutory definitions apply as the context requires. 
  • Scheme administration regulations: is the Occupational Pension Schemes (Scheme Administration) Regulations 1996 (SI 1996/1715) (as amended).
  • Scheme apportionment arrangement: is a scheme apportionment arrangement under the Occupational Pension Schemes (Employer Debt) Regulations 2005 (SI 2005/678) (as amended), which does not require regulator approval.
  • Scheme-related event: is an event in respect of the scheme.  See also paragraphs 63 to 79.
  • S179: refers to s179 of the Act and is the PPF’s valuation basis for a scheme’s deficit, and it is used for the purpose of calculating the risk-based pension protection levy. 
  • S75 basis: refers to s75 of the Act and it is often known as the buy-out basis for a scheme’s deficit. S75 requires the scheme actuary to apply certain methodology to estimate the amount needed to secure the scheme’s liabilities with annuities purchased from a regulated insurance company. 
  • s75 debt: is the debt (including a contingent debt) owed by the employer to the trustees of the scheme and calculated in accordance with the s75 basis, including the whole or part of any such debt and debts that are, or might become, due (as the context requires).   
  • Service company: has the same meaning as in s44 of the Act.  See also paragraph 191.
  • Statutory funding objective: has the same meaning as in s221 to s233 of the Act (Part 3 of the Act), which is that a scheme must have sufficient and appropriate assets to cover its technical provisions (its liabilities).
  • Technical provisions: is a calculation, based on methods and assumptions usually agreed by the trustees and employer and set out in Part 3 of the Act, of the amount needed at a particular time to make provision for the scheme’s liabilities.  Technical provisions are individual to each scheme. This will not yet be available for every scheme.  Further information can be found in the scheme funding section on the regulator’s website.
  • Type A event: is any event that is materially detrimental to the ability of the scheme to meet its pension liabilities, as well as some events that are directly detrimental to members’ benefits, as described in more detail in Part I. 
  • Wider employer group: consists of any person who is connected to or associated with the employer.
  • Wife: includes former wife and reputed wife.
  • Withdrawal arrangement: is a withdrawal arrangement under the Occupational Pension Schemes (Employer Debt) Regulations 2005 (SI 2005/678) (as amended) which does not require regulator approval.