Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Asset-backed contributions definition

What does Asset-backed contributions mean? An asset‑backed contribution (ABC) is an arrangement for funding defined benefit pension schemes in which the sponsoring employer uses income‑producing assets (for example, property or receivables) to support deficit reduction contributions. Commonly, the asset is transferred or charged to a special purpose vehicle (often a Scottish limited partnership) that pays an income stream to the scheme for an agreed term. The scheme takes security over the asset or SPV, improving covenant and insolvency recoveries; at term end, residual value may revert to the employer. The term is not defined in legislation or case law; it is a market...

Asset-backed contributions in UK defined benefit occupational pension schemes: structuring, employer-related investment compliance, Pensions Regulator/PPF treatment, tax and trustee considerations

Published by a LexisNexis Pensions expert

Practice notes

This practice note applies solely to Defined benefit occupational pension schemes

Asset-backed contribution structures are one means of helping to cut Deficits within pension schemes. They carry risks; however, sound professional advice and careful structuring can limit these. Appropriate advice helps identify pitfalls and shape a robust framework. Yet the central issue for the trustee and its advisers is whether entering an asset-backed contribution puts the trustee and scheme in a stronger position than committing to a lengthy recovery plan. Trustees should weigh comparative outcomes, timing and certainty before proceeding. Since 2008, when Marks & Spencer pioneered a property-backed contribution aimed at trimming its pension deficit by £500m, several prominent organisations—among them John Lewis, Sainsbury’s and Whitbread—have adopted similar approaches. Today, employers regard Asset-backed contributions as an efficient method of financing rising shortfalls in defined benefit occupational pension schemes. For many, ABCs can complement, or replace, prolonged deficit repair in suitable circumstances thoughtfully.

What is an asset-backed contribution arrangement?

An asset-backed contribution (ABC) is a contractual funding structure under which a special purpose vehicle is established to deliver an income stream to the pension scheme...

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Nick Stones

Pinsent Masons

Nick is a partner at Pinsent Masons specialising in pensions. He advises corporate sponsors and trustees of pension schemes. Nick also has experience in the public sector, acting for contractors and central and local government. He has also built up an increasing presence in advising charitable and not-for-profit organisations on managing pension risks. Nick is a full member of the Association of Pension Lawyers, he sits on the regional committee of the Pensions Management Institute, presents at internal and external seminars and writes for the pension press....

Web page updated on 21/05/2026

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