Calculating a section 75 debt

Produced in partnership with Laura Brook of Eversheds Sutherland and Richard Evans of Herbert Smith Freehills

Practice notes

Calculating a section 75 debt

Produced in partnership with Laura Brook of Eversheds Sutherland and Richard Evans of Herbert Smith Freehills

Practice notes

THIS PRACTICE NOTE APPLIES IN RELATION TO DEFINED BENEFIT OCCUPATIONAL PENSION SCHEMES

Sections 75 and 75A of the Pensions Act 1995 (PA 1995) impose an obligation on a statutory employer in relation to a defined benefit occupational pension scheme to fund any shortfall in scheme funding upon the occurrence of certain events. A debt triggered under either of these sections is referred to as a ‘section 75 debt’ or 'employer debt’.

The finer details as to how sections 75 and 75A apply are set out in the Occupational Pension Schemes (Employer Debt) Regulations 2005, SI 2005/678 (the employer debt regulations), although the Occupational Pension Schemes (Deficiency on winding up etc) Regulations 1996, SI 1996/3128 may also be relevant (see Calculating the section 75 debt: single-employer schemes, below).

For further information on section 75 debts and circumstances in which they can be triggered, see Practice Note: When is a section 75 debt triggered?

Who is responsible for calculating the section 75 debt?

Since 6 April 2008, calculating

Laura Brook

Partner, Eversheds Sutherland

Laura is a partner in Eversheds Sutherland's London pensions team. Laura joined Eversheds Sutherland in 2006 and qualified as a solicitor in 2008. She advises trustees and corporate clients on all aspects of pensions law.

Her experience includes advising trustees and employers in relation to scheme mergers following company restructurings and post-merger rule consolidations; advice on pension scheme governance; acting for employers and trustees in relation to scheme funding negotiations and assisting with parent company guarantees and other security documents; advising employers and trustees in relation to scheme change and consultation exercises; providing corporate support and advice in relation to the pensions aspects of share and business sales, including advice in relation to employer debt legislation, anti-avoidance legislation and clearance; and providing training in respect of key pensions legislation and proposed or recent changes.

Richard Evans

Solicitor, Herbert Smith Freehills

Richard is a Professional Support Lawyer in Herbert Smith Freehills' pensions group. He has worked as a pensions lawyer for more than 30 years. For most of that time was a partner at another major firm, where he was the lead adviser to various household-name pension schemes.

Richard is a Fellow of the Pensions Management Institute and a member of the Association of Pensions Lawyers. He sits on Lexis PSL's Pensions Consulting Editorial Board, and on the Society of Pensions Professionals' Legislation Committee. He has spoken at various industry conferences and seminars.

Jurisdiction(s):

United Kingdom

Key definition:

Employer debt definition

What does Employer debt mean?

Statutory debt due under the Pensions Act 1995, ss 75–75A and underlying regulations from an employer to a defined benefit scheme if there is a funding deficit (calculated on a buy-out basis).

Calculating a section 75 debt

Produced in partnership with Laura Brook of Eversheds Sutherland and Richard Evans of Herbert Smith Freehills

Calculating a section 75 debt

Produced in partnership with Laura Brook of Eversheds Sutherland and Richard Evans of Herbert Smith Freehills