Commentary on Sections Summary Circumstances in which Board assumes responsibility for eligible schemes Section 127: Duty to assume responsibility for schemes following insolvency event
401.For members of occupational pension schemes to be entitled to compensation under Chapter 3 of Part 2 the Board must assume responsibility for the scheme. There are a number of circumstances in which the Board will assume responsibility for a scheme. These are set out in this section, and in sections 128, (duty to assume responsibility for a scheme) 152 (duty to assume responsibility following reconsideration) and 158 (duty to assume responsibility for closed schemes). These are the only circumstances in which the Board will assume responsibility for a scheme.
402.This section applies where a qualifying insolvency event (see subsection (3)) has occurred in relation to the employer in relation to an eligible scheme.
403.Subsection (2) states that the Board must assume responsibility for the scheme if:
	the assets of the scheme immediately before the insolvency date (see section 121(8)) were not sufficient to meet the scheme’s protected liabilities (see section 131). (For this purpose assets relating to money purchase schemes are disregarded);
	a scheme failure notice becomes binding; and
	there has not been and there cannot be a withdrawal event resulting from a withdrawal notice issued before the schemes failure notice was issued.
404.By virtue of subsection (3)(a) an insolvency event which occurs before the day appointed under section 126(2) (eligible schemes) by order is not a qualifying “insolvency event” for these purposes. The insolvency event must also be the first insolvency event to occur in relation to the employer on or after that day, and must not occur during an assessment period (see section 132(assessment periods)) in relation to the scheme which began before the occurrence of the insolvency event in question. For example an employer in relation to a scheme could be subject to administration which then turns into liquidation. The commencement of the liquidation is an insolvency event. However, as the administration will already have been triggered the Board’s involvement and started an assessment period, there is no need for the subsequent insolvency event to start the process again.