Defined Benefit Pensions Regulation: Flexible Apportionment Arrangements
House of Commons · Written Statements · 16 Jun 2026 · 1 speech · Official Report
We are taking action to ensure the strong regulatory framework for defined benefit pensions remains effective as innovation develops, to manage future risks and protect member benefits. On 4 December 2025, a novel use of existing legislation led to an asset manager assuming responsibility for the liabilities and the assets of another employer’s defined benefit pension scheme. This Government have since delivered the landmark Pension Schemes Act 2026, introducing major reforms to UK occupational pensions, consolidating our fragmented pensions system into larger, better run, more secure schemes. We want to encourage innovation that has the potential to benefit scheme members throughout the pension system and need to ensure the right legislative guard rails are in place for this to happen safely. Flexible apportionment arrangements, the legislative mechanism used in this transaction, were introduced in 2012. They were designed to ensure that corporate restructurings, mergers and sales do not cause employer insolvency events when there is an appropriate sponsor who can support the scheme. Whilst this transaction complied with the existing FAA mechanism it did so in a way not anticipated when the mechanism was introduced. We therefore intend to review this area of legislation to ensure the regulatory standards and safeguards evolve and keep pace with the innovation we are seeing in the pension market. This is to protect members and the Pension Protection Fund, which is there to...