Flexible Apportionment Arrangement

Certain conditions must be met for a legally binding FAA to be set up. These are as follows:

• The employer (Employer B) agreeing to takeover responsibility for the departing employer’s (Employer A) pension liability must already be participating in the Scheme, or will participate following the FAA. Both employers must consent in writing to the FAA.
• A cessation event has, or is about to occur. This may be a change in legal entity or ceasing to have any active members.
• The ‘Funding Test’ must be met, to ensure Employer B is financially able to take on Employer A’s pension liability and the Scheme is no worse off from a funding perspective.
• The employers requesting an FAA must pay the Trustee’s costs associated with the FAA.
• The Trustee must consent to the FAA.

The FAA process varies depending on the size and circumstances of an employer. A streamlined FAA process exists for small employers wishing to incorporate. An FAA may be appropriate for companies wishing to restructure e.g. a parent company wants to merge some of its subsidiaries.

Please get in touch to discuss your situation and whether an FAA can help.

The cost of an FAA will depend on the size, materiality and complexity of the case.

Contact us to request further information.