Apportionment arrangements

The following Pensions practice note provides comprehensive and up to date legal information covering:

  • Apportionment arrangements
  • Scheme apportionment arrangement (SAA)
  • The funding test
  • Circumstances in which the funding test does not apply
  • Regulated apportionment arrangement (RAA)
  • Requirements for a regulated apportionment arrangement
  • Involvement of the PPF
  • Flexible apportionment arrangement (FAA)
  • Apportionment arrangements and clearance
  • Notifiable events

Apportionment arrangements


Apportionment arrangements provide exiting employers of underfunded defined benefit occupational pension schemes with an alternative to paying in full a statutory debt arising under the Pensions Act 1995, s 75, (a s 75 debt) as a result of the occurrence of an employment-cessation event.

When an employment-cessation event occurs in relation to an exiting employer, a s 75 debt becomes payable by the exiting employer to the scheme. In a multi-employer scheme, the exiting employer's s 75 debt is its share of the scheme deficit calculated on a buy-out basis (its liability share).

An apportionment arrangement is an arrangement, provided for in the scheme rules, under which the scheme deficit is apportioned differently between the participating employers so that a lower share is apportioned to the exiting employer than its liability share and the balance of what it would have paid is apportioned to one or more of the remaining employers. Apportionment arrangements are similar to withdrawal arrangements in that they deal with an exiting employer in a multi-employer scheme. However, there are significant differences.

For more information, see Practice Note: Withdrawal arrangements.

There are three types of apportionment arrangement:

  1. scheme apportionment arrangement (SAA)

  2. regulated apportionment arrangement (RAA), and

  3. flexible apportionment arrangement (FAA)

The statutory conditions that must be met by scheme apportionment arrangements are set out in

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