Multi-employer defined-benefit (MEDB) pension schemes originally arose as a solution for smaller employers who wanted to provide pension benefits for their employees but lacked the resources to do so on their own. They proved particularly popular among charities. By joining such a scheme along with other, non-associated employers, advantages could be obtained from economies of scale, better investment opportunities, reduction of risk and lower administration costs.

It is highly likely that, in common with the defined-benefit sector as a whole, most of these schemes are currently in deficit. However, until recently, most of these deficits did not appear anywhere on charities’ balance sheets due to the way in which they were accounted for.