How to deal with a section 75 debt on a corporate transaction
How to deal with a section 75 debt on a corporate transaction

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

  • How to deal with a section 75 debt on a corporate transaction
  • Determining whether a section 75 debt will be triggered
  • Dealing with the section 75 debt
  • Paying the section 75 debt in full or indemnisation
  • Avoiding a section 75 debt by restructuring the transaction
  • Deferred debt arrangements
  • Apportionment arrangements
  • Withdrawal arrangements
  • Relevant transfer deductions
  • Clearance
  • more

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

This Practice Note explains how a section 75 debt can be dealt with on a transaction, particularly in a multi-employer scheme where different options are available. This Practice Note also covers considerations relating to the Pensions Regulator's clearance procedure and the notifiable events regime.

For considerations specific to scheme trustees when deciding how a section 75 debt should be dealt with on an employment cessation event, see Practice Note: employment cessation events—trustee decision-making process.

For considerations specific to section 75 debts triggered in the context of a group reorganisation, see Practice Note: Intra-group reorganisations and pensions.

Determining whether a section 75 debt will be triggered

Section 75 debt triggers

A section 75 debt (also known as an 'employer debt') may become due from the employer of a defined benefit occupational pension scheme where:

  1. the scheme is a multi-employer scheme and an employment cessation event occurs in relation to that employer (referred to in this Practice Note as a 'cessation employer')—an employment cessation event occurs where the cessation employer ceases to have active members in the scheme at a time when one other participating employer in the scheme has at least one active member

  2. an insolvency event occurs in relation to that employer, or

  3. the scheme enters winding-up

For more information,