What happens to a pension scheme on a company’s insolvency?
Produced in partnership with Thomas Robinson of Wilberforce Chambers
What happens to a pension scheme on a company’s insolvency?

The following Restructuring & Insolvency guidance note Produced in partnership with Thomas Robinson of Wilberforce Chambers provides comprehensive and up to date legal information covering:

  • What happens to a pension scheme on a company’s insolvency?
  • What happens to a pension scheme on a company’s insolvency?
  • Types of pension scheme
  • Status of pension scheme’s funds on a company’s insolvency
  • Section 75 debts
  • PPF Assessment
  • Scheme winding-up
  • Unpaid contributions
  • Company as trustee
  • Brexit
  • more

This Practice Note considers the effect of a company’s insolvency on an occupational pension scheme in respect of which the company is the sponsoring employer. It also notes consequences if the company is the trustee of the scheme. It does not consider multi-employer schemes.

What happens to a pension scheme on a company’s insolvency?

On a company’s insolvency the funds in its pension scheme do not automatically form part of the assets of the company.

Notification obligations on the IP

Where an insolvency practitioner (IP) begins to act in relation to a company which sponsors an occupational pension scheme, the IP must notify the following persons of this as soon as reasonably practicable:

  1. the Pensions Regulator (TPR)

  2. the Pension Protection Fund (PPF), and

  3. the trustees or managers of the scheme

Moreover, where an 'insolvency event' (as defined in section 121(3) of the Pensions Act 2004 (PeA 2004)) occurs in relation to a company that is the employer in relation to an occupational pension scheme, there is a separate obligation for the IP appointed over that company to give notice (a section 120 notice) of the insolvency to:

  1. TPR

  2. the PPF, and

  3. the trustees or managers of the scheme

While both these notification obligations may be triggered at the same time, TPR has clarified that they remain separate. In other words, if both obligations