Cessation Event Options

This section provides guidance on alternatives to a Period of Grace 

Previously when your Church’s last member left the Baptist Pension Scheme (the “Scheme”) your Church would have been required to request a Period of Grace (PoG) to avoid triggering a cessation event and the resulting s.75 pension debt. Unfortunately, we are no longer able to offer this option, however, there are alternatives that can be put in place. 

An update communication was sent to Churches in September 2023 from the Pension Trustee and the Baptist Union, explaining that work is continuing to fully secure the Scheme’s DB Plan benefits with the insurance company Just Group (“Just”). The communication included a section specifically about Periods of Grace (PoGs). Unfortunately, the Pension Trustee is now unable to use this legislative lever to manage cessation events and resulting s.75 pension debts as the intention to Buy Out the Scheme liabilities has been confirmed by the Baptist Union.

However, we are pleased to be able to offer the following alternative solutions to a PoG. The Church can either:

  • Enter into a Deferred Debt Arrangement – a legal deed signed by both the Pension Trustee and the Church Trustee which allows the Church to continue participating without a member

Or

  • Request Discharge from the Scheme

Deferred Debt Arrangement (DDA)

In accordance with the overarching pensions legislation, a DDA allows a Scheme Employer to remain participating but removes the requirement for an Active Member.

In terms of our Scheme, by entering into a DDA the Church can continue as a Participating Employer, paying Deficit Recovery Contributions (DRCs) until such time as the remaining Participating Employers are discharged from their Scheme responsibilities to fund the DB section of the Scheme. (More information on that topic can be found in the September joint communication letter from the Pension Trustee and the Baptist Union)

DDA’s have always been part of our toolkit to help Scheme Employers manage triggered debts. Previously they were only offered at the discretion of the Trustee if no alternative solution to manage historic s.75 pension debts could be found.

However, they are an effective alternative to a PoG, and we are offering the Church a DDA at no cost.

Discharge from the Scheme

Alternatively, the Church could request that its Church Trustees are discharged from their Scheme funding responsibilities.

As a result of the Just Buy In deal, if the last member left the Scheme after June 2022, (when the Just Buy In completed) the Church’s estimated debt triggered is £0.00; as such cessation costs have been reduced to £1,000. Should a new Minister or Staff Member be called and wish to be enrolled into the Scheme, the Defined Contribution section will be open to them, and the Church will have no concern regarding historic Defined Benefit liability.

Decision

Once the Church has considered the two options available and decided how to proceed, please email pensionshared@baptist.org.uk.

If your Church wishes to enter into a DDA, one of the Pensions Team will follow up with a pre-populated DDA. Alternatively, if the Church chooses to be discharged, please send either a copy of the minutes where the decision to be discharged was reached or a request on Church Letterhead.

 

Please send any queries you may have regarding this matter to the same inbox and we will be more than happy to answer them: pensionshared@baptist.org.uk.

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