Section 75 debts—beginners’ guide
Produced in partnership with Wyn Derbyshire of gunnercooke LLP
Section 75 debts—beginners’ guide

The following Pensions guidance note Produced in partnership with Wyn Derbyshire of gunnercooke LLP provides comprehensive and up to date legal information covering:

  • Section 75 debts—beginners’ guide
  • Triggering events
  • Calculation and classification of section 75 debts
  • Employment cessation events
  • Periods of grace
  • Section 75 debts and frozen schemes
  • Easements to the section 75 debt regime
  • Apportionment arrangements
  • Withdrawal arrangements
  • Deferred debt arrangements
  • more

This guide is primarily aimed at trainees, newly qualified lawyers and other persons who are new to or unfamiliar with pensions law.

One of the most important areas of pensions law today is the legislation relating to section 75 debts (also known as employer debts or statutory debts), which is set out primarily in:

  1. sections 75–75A of the Pensions Act 1995 (PA 1995), and

  2. underlying regulations, principally the Occupational Pension Schemes (Employer Debt) Regulations 2005, SI 2005/678 (the Employer Debt Regulations)

The employer debt legislation principally relates to employers participating in defined benefit (DB) occupational pension schemes (although, in very limited circumstances, the employer debt legislation can also apply to defined contribution (DC) pension schemes, but those circumstances are not discussed in this guidance note). Essentially the legislation provides that a (non-priority) debt can be created, owed by an employer (or employers) to an underfunded DB pension scheme, upon the occurrence of a ‘section 75 triggering event’.

Triggering events

There are three triggering events:

  1. when an employer participating in a DB scheme suffers an ‘insolvency event’, or an application is made by the trustees of the pension scheme seeking admission to the Pension Protection Fund (PPF) (or the Board of the PPF issues a notice indicating that the Pensions Regulator believes statutory conditions relating to PPF entry are likely to be