Employer debt meaning

When does a section 75 debt arise? An s 75 liability crystallises in respect of an occupational pension scheme that is underfunded on a buy-out basis and: an employment-cessation event happens for a relevant participating employer within a multi-employer scheme an insolvency event occurs in relation to a participating employer of the scheme, or the scheme formally goes into winding up In a multi-employer scheme, an employer’s s 75 debt is its allocated share of the scheme deficit, appropriately assessed on a buy-out basis. As an alternative to immediately paying the s 75 debt in full, an employer may enter into a deferred debt arrangement, an apportionment arrangement, or a withdrawal arrangement. Section 75 does not apply at all to money purchase schemes, unregistered pension schemes, unfunded public sector schemes, and a scheme with only one member. ...

THIS CHECKLIST APPLIES TO OCCUPATIONAL PENSION SCHEMES This checklist highlights the key actions involved in bringing an occupational pension scheme to a close—whether a defined benefit (DB) or defined contribution (DC) arrangement—and aligns with winding-up guidance from the Pensions Regulator (TPR). For fuller detail on these steps, see Practice Notes: Winding up a defined benefit (DB) occupational pension scheme; Winding up a defined contribution (DC) occupational pension scheme; and Winding-up an occupational pension scheme—statutory disclosure from 6 April 2014, reporting and record-keeping requirements. Data cleansing and reconciling records Once trustees decide to wind up the scheme, they should carry out a thorough data cleansing exercise. As this can be lengthy, it should, where practicable, be completed before formal winding-up starts. Where trustees cannot control the timing of the wind-up, cleansing and planning should begin as early as possible within the winding-up process. As part of the data cleansing exercise, trustees should: Check and reconcile member records. Where the scheme is a former contracted-out...

THIS CHECKLIST APPLIES TO MULTI-EMPLOYER DEFINED BENEFIT OCCUPATIONAL PENSION SCHEMES General For an employer leaving an underfunded defined benefit occupational scheme, apportionment arrangements provide an option other than paying an s 75 debt in full when an employment-cessation event occurs. There are three forms of apportionment arrangement: scheme apportionment arrangement (SAA) regulated apportionment arrangement (RAA) flexible apportionment arrangement (FAA) The statutory requirements for apportionment are prescribed in the Employer Debt Regs, SI 2005/678, regs 6B, 6E and 7A, together with the definitions in reg 2(1). The Pensions Regulator (TPR) has produced guidance to help employers and trustees understand the available approaches for addressing s 75 debts, including apportionment arrangements. If an apportionment arrangement could adversely affect a scheme’s ability to meet its pension liabilities, the exiting employer and the remaining employers should consider seeking clearance from TPR...

Original news Mr S (CAS-39170-Y5Q0)—13 October 2023 Summary The DPO has partly upheld a complaint concerning a section 75 liability arising within a non‑segregated defined benefit scheme governed by Scots law. The complainant, an employer participating in the scheme, had incorporated his sole‑trader plumbing business. He was wrongly assured that incorporation would have no impact; in reality, it triggered a section 75 employer debt under the Pensions Act 1995. Because of the scheme’s complexity, the company was not told the amount of the liability for well over six years. The DPO decided that: no limitation or prescription defence applied; the scheme administrator made a negligent misstatement about the impact of changing the business’s legal status, the complainant reasonably relied on that advice, and suffered financial loss; and the failure to provide timely notice that a section 75 debt had arisen was maladministration. This outcome highlights the complexity of the employer debt framework and the importance of seeking advice. ...

What are the practical implications of this case? The bond was found to be triggered by insolvency alone because the parties had agreed a tailored clause to that effect. Even so, the ruling is of wider significance as it reinforces that, under the JCT termination regime: the contractor’s insolvency, by itself, is not a breach of contract by the contractor; and where, following insolvency, the contractor fails to remit sums due to the employer assessed under the contract—for example, the cost of engaging others to complete the works—that failure amounts to a breach of contract This distinction is important where an employer must first establish a contractor breach before calling on a performance bond. That is the position under the unamended ABI Model Form—for a suggested change on this point, see Practice Note: Amendments to ABI Model Form of Guarantee Bond. What was the background? Ziggurat appointed County Contractors (County) as contractor under a JCT 2011...

In this issue: Enforcing security and property insolvency Lease covenants and obligations Repairing obligations and dilapidations Trespass and adverse possession Rent and rates Disputes and remedies Service charges Additional Property Disputes updates LexTalk®Property Disputes: a Lexis®Nexis community New and updated content Dates for your diary Trackers Latest Q&As Enforcing security and property insolvency LPA 1925 receiver appointment is personal; employer not vicariously liable (Yerbury v Azets Holdings Ltd) In Yerbury v Azets Holdings Ltd [2025] EWHC 757 (KB), the King’s Bench Division dismissed an appeal and upheld a Master’s order striking out a vicarious liability claim against Azets Holdings Ltd (AHL), successor to the receivers’ former employer. A company, Bethel, borrowed from Amicus to purchase a property, then defaulted; receivers were appointed and the asset sold for less than a £5m valuation. The appellant proceeded as assignee via an assignment from Bethel’s liquidator. The Master decided the claim was directed...

A risk with employment cessation events is that they can be set off unintentionally, for example because the last remaining active member of an employer in a multi-employer defined benefit scheme has left. The Employer Debt Regulations, SI 2005/678 were amended with effect from 6 April 2008 to introduce grace periods, a device intended to help employers deal with accidental employment cessation events. For further information on employment cessation events and other section 75 triggers, see Practice Note: When is a section 75 debt triggered? When can a grace period be used? When can a grace period be used? An employer in a multi-employer defined benefit scheme may notify the trustees that it wishes to enter a grace period (by giving a grace period notice) if: that employer ceases to employ active members at a time when at least one other employer still employs active members, thereby creating an employment cessation event, and it intends to employ at least one individual who is an...

This practice note applies to defined benefit occupational pension schemes The importance of identifying a scheme’s statutory employer(s) A fundamental element of the law governing occupational pension schemes, particularly defined benefit (DB) schemes, is that the main burden of supporting the scheme lies with its sponsoring employers, as a matter of law alone indeed. An employer might have exited the scheme previously without settling all liabilities owed to it; in such circumstances they may still be a ‘statutory employer’ even though they no longer participate. They may therefore continue to bear obligations in relation to the scheme. Under the registered pension scheme regime, various specific obligations fall upon those who qualify as ‘statutory employers’, a notion carried over from the earlier tax-exempt approval regime in force before A-day (for further information on the pre A-day regime, see The pre A-day pensions tax regime [Archived]). These duties will typically extend beyond those that a participating employer assumes under the scheme’s trust deed and rules. For...

Practice Note This Practice Note explores the questions that arise concerning the application of liquidated damages clauses as a substitute for seeking damages for breach of contract. It looks at instances of liquidated damages clauses for either the employer or the employee. It contrasts enforceable liquidated damages terms with penalty provisions and reviews the inclusion of repayment terms. Relevant case law is likewise analysed...

This Deed is entered into on the [ insert day ] day of [ insert month ] 20[ insert year ] Parties [ Insert full company name ], incorporated in England and Wales with company number [ insert number ], and whose registered office is at [ insert registered company address ] (the Departing Employer); [ Insert full company name ], incorporated in England and Wales with company number [ insert number ], and whose registered office is at [ insert registered company address ] (the Receiving Employer); and [ [ Insert full name of company ] incorporated in England and Wales with company number [ insert number ] and having its registered office at [ insert registered company address ] OR [ insert individual name(s) ] of [ insert individual address(es) ] ] (the Trustees). Background: (A) [ insert full name of scheme ] (the Scheme) was constituted by an [ interim OR definitive ] deed dated [ insert...

This Deed is entered into on the [ insert day ] day of [ insert month ] 20 [ insert year ], by and between the parties set out below, namely: Parties [ insert full company name ], registered in England and Wales with company number [ insert number ], and having its registered office situated at [ insert registered company address ] (the Receiving Employer); [ insert full company name ], registered in England and Wales with company number [ insert number ], and having its registered office situated at [ insert registered company address ] (the Principal Employer); [ insert full name of company ], registered in England and Wales with company number [ insert number ], and having its registered office situated at [ insert registered company address ] OR [ insert individual name(s) ] of [ insert individual address(es) ] (the 'Trustees'). Background: (A) [ Insert full name of scheme ] (the Scheme) was constituted by...

This precedent is produced on the assumption that the drafter acts for the buyer and on the footing that the target company (the Company) is a subsidiary of the Seller. You are strongly encouraged to engage a pensions specialist at the earliest opportunity. 1 Definitions For the purposes of paragraphs 2 to 9 (inclusive): Employee means any current or former employee, officer or director of the Company [ or of any Group Company ] [ and any other person involved in managing the affairs of the Company ]; Pension Scheme[s] means [ [ name(s) of scheme(s) ] OR an arrangement or practice for the payment of, or contribution towards, an annuity, pension, lump sum, gratuity or similar benefit to be provided on retirement, ill-health, death or change in service status, or pursuant to a pension sharing order, in relation to the service or historic service of an Employee or any other person, or for the benefit of that individual’s dependants ]. ...