Employer debt regime

Copyright © 2025 LexisNexis

Under the Pensions Act 1995, s 75, a statutory debt (called a section 75 debt or employer debt) may become due from an employer of an underfunded defined benefit occupational pension scheme in certain circumstances. One of the key aims of the legislation is to prevent solvent employers abandoning underfunded pension schemes.

The Occupational Pension Schemes (Employer Debt) Regulations 2005, SI 2005/678 (the Employer Debt Regulations) contain further provisions setting out when a section 75 debt is triggered, how it is calculated and the different methods of dealing with a debt.

Section 75 debts are calculated on a buy-out basis. This is the basis which reflects the cost of buying out pension liabilities with an insurance company. It is an onerous basis, which means that section 75 debts can often be very expensive for employers.

Which schemes does the section 75 debt regime apply to?

The Pensions Act 1995, s 75 and the Employer Debt Regulations (together the ‘section 75 debt regime’) apply to all occupational pension schemes except:

  1. •

    money purchase schemes, and

  2. •

    schemes listed in the Employer Debt Regulations, SI 2005/678, reg 4(1)

For

To view the latest version of this document and thousands of others like it, sign-in with LexisNexis or register for a free trial.

Existing user? Sign-in TAKE A FREE TRIAL
Powered by Lexis+®
Latest Pensions News

IFRS Foundation publishes near-final guidance on reporting uncertainties in financial statements

The International Financial Reporting Standards (IFRS) Foundation has published near-final examples that illustrate how companies can improve disclosure of uncertainties in their financial statements, using climate-related scenarios as illustrations. Developed by the International Accounting Standards Board (IASB) in response to stakeholder feedback regarding insufficient uncertainty reporting, these examples are applicable to all types of uncertainties, not solely those related to climate. The IASB collaborated with the International Sustainability Standards Board (ISSB) to ensure alignment with sustainability disclosure requirements. Final examples are anticipated in October 2025.

New research from TPR shows schemes still suffering from ‘data debt’ in preparation for pensions dashboards readiness

The Pensions Regulator (TPR) has published new research on 24 July 2025 which shows that although 80% of pension schemes are on track to connect to the central digital architecture by or before their connect-by date in the Department for Work and Pension’s guidance, there is still a lot of work to do for schemes on making sure data about the value of a saver’s pension is available digitally and is up-to-date. TPR research finds that one in four schemes still hold some data in non-digital form and only half of the schemes offering defined benefit (DB) pension benefits have recent DB value data for all members, while in addition many schemes still need to deliver their data improvement plans.

PPI research on low earners aims to bridge gaps in understanding to assist pensions policy

The Pensions Policy Institute (PPI) has published the first report in its series titled ‘From Payslip to Pension: Life Course Impacts on Retirement Saving Among Low Earners’. The PPI project is designed to address gaps in understanding low earners within the context of pensions policy, particularly when configuring automatic enrolment parameters that may inadvertently disadvantage this group. The report finds that low earners represent a diverse group with varying reasons for low earnings and different levels of financial security, making it challenging to develop policies that adequately serve all subgroups. This complexity is particularly evident in pensions policy, where features of automatic enrolment such as the trigger income and lower earnings limit rely on earnings thresholds. The PPI research also identifies which low earners are most likely to continue facing challenges over time, providing valuable insights for potential policy interventions.

Minister for Pensions hosts roundtable on ‘Pound for Pound’ initiative in shift from cost to Value for Money

The Minister for Pensions, Torsten Bell MP, has hosted a roundtable with regulators and leading pension providers to support a joined-up approach to Value for Money (VFM) in pensions. The event marked the first public discussion of the ‘Pound for Pound’ (‘£4£’) initiative, aimed at shifting the UK market from cost-based comparisons to broader value-based metrics, shifting market conversations away from cost towards value. This shift is essential for the success of the government’s proposed approach set out in the Pension Schemes Bill 2025. Insights from Australia’s superannuation system were central to the session, highlighting how clear benchmarking, transparency and regulatory oversight have transformed both member outcomes and the understanding of value in Australia. Intended to inform the impending regulatory consultation on VFM metrics, the superannuation system formed a key reference point as the discussion explored how lessons from Australia and insights from providers could shape regulatory thinking and support the development of the Pension Schemes Bill. Roundtable participants including the Department for Work and Pension, the Financial Conduct Authority, Pensions UK and a number of the Mansion House Accord signatories, agreed that now is the time for government, regulators and industry to collaborate in shaping and embedding a robust, fit-for-purpose VFM regime.

View Pensions by content type :  
News
Practice notes
Precedents
Q&As

Popular documents

If a beneficiary signs a deed of disclaimer of their share of an estate and the estate pays their legal

If a beneficiary signs a deed of disclaimer of their share of an estate and the estate pays their legal fees, will that count as a PET against their estate?A disclaimer is the refusal of a gift prior to acceptance. The refusal of the gift must take place before the beneficiary accepts any benefit

Can shares in a limited company that have not been paid-up at all be cancelled?

Can shares in a limited company that have not been paid-up at all be cancelled?A limited company having a share capital may not alter that share capital, except in the ways listed in section 617 of the Companies Act 2006 (CA 2006). Shares in a company cannot simply be cancelled without following an

Glossary—Latin legal terms

Glossary—Latin legal termsDespite attempts in recent years to simplify the language used in legal cases, there are still a number of Latin phrases commonly used in personal injury claims. The following Latin phrases are listed in alphabetical order:Latin

Template for regulatory references given by SMCR firms and disclosure requirements

Template for regulatory references given by SMCR firms and disclosure requirements[Insert addressee details]Dear [insert name][It is our understanding that [insert name of prospective employee] [was an employee of yours between the dates of [insert dates as appropriate] OR is a current employee of
If a beneficiary signs a deed of disclaimer of their share of an estate and the estate pays their legal

If a beneficiary signs a deed of disclaimer of their share of an estate and the estate pays their legal

If a beneficiary signs a deed of disclaimer of their share of an estate and the estate pays their legal fees, will that count as a PET against their estate?A disclaimer is the refusal of a gift prior to acceptance. The refusal of the gift must take place before the beneficiary accepts any benefit

Can shares in a limited company that have not been paid-up at all be cancelled?

Can shares in a limited company that have not been paid-up at all be cancelled?

Can shares in a limited company that have not been paid-up at all be cancelled?A limited company having a share capital may not alter that share capital, except in the ways listed in section 617 of the Companies Act 2006 (CA 2006). Shares in a company cannot simply be cancelled without following an

Glossary—Latin legal terms

Glossary—Latin legal terms

Glossary—Latin legal termsDespite attempts in recent years to simplify the language used in legal cases, there are still a number of Latin phrases commonly used in personal injury claims. The following Latin phrases are listed in alphabetical order:Latin

Template for regulatory references given by SMCR firms and disclosure requirements

Template for regulatory references given by SMCR firms and disclosure requirements

Template for regulatory references given by SMCR firms and disclosure requirements[Insert addressee details]Dear [insert name][It is our understanding that [insert name of prospective employee] [was an employee of yours between the dates of [insert dates as appropriate] OR is a current employee of