Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Defined benefit definition

What does Defined benefit mean? In legal practice, defined benefit (DB) refers to occupational pension benefits fixed by a formula—commonly based on pensionable salary (final salary or career average) and length of service—rather than by the amount of contributions paid or investment performance. The term is used and recognised in UK pensions legislation (including the Pensions Acts and related regulations) and in Ireland (Pensions Act 1990), with broadly consistent usage across England & Wales, Scotland, Northern Ireland and Ireland. Key features include: the sponsoring employer bears the funding and investment risk; trustees obtain regular actuarial valuations; and any deficit must be addressed through...

Relevant transfer deductions: legislative framework, calculation and requirements for reducing section 75 debts in multi-employer defined benefit schemes

Published by a LexisNexis Pensions expert

Practice notes

THIS PRACTICE NOTE APPLIES TO MULTI‑EMPLOYER defined benefit OCCUPATIONAL PENSION SCHEMES

This Practice Note examines relevant transfer deductions—covering the statutory framework, the method of calculation and potential practical challenges. It addresses their legislative basis, approaches to calculation and the kinds of practical difficulties that may arise.

When can a relevant transfer deduction apply?

Such deductions arise where a statutory debt (the section 75 debt) is triggered in relation to a participating employer in a multi‑employer pension scheme under the Pensions Act 1995, ss 75–75A, and the Occupational Pension Schemes (Employer Debt) Regulations 2005, SI 2005/678 (the Employer Debt Legislation). This occurs, for example, on an employment‑cessation event—namely, where one participating employer stops employing active members while another participating employer continues to employ at least one active member. Put plainly, absent a section 75 trigger under the Employer Debt Legislation, a relevant transfer deduction cannot apply. The section 75 debt due from the participating employer in a multi‑employer scheme (described in this Practice Note as the departing employer) equals the proportion of the overall scheme funding shortfall (assessed on a buy‑out basis) attributable to service with that employer. Legislation terms this proportion the departing employer’s liability share. Where a relevant transfer...

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Web page updated on 21/05/2026

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