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...

Section 75 contingent employer debt in UK DB schemes: trustee wind-up powers, side agreements and mitigation, insolvency and covenant impacts, directors’ duties and accounting disclosure

Published by a LexisNexis Pensions expert

Practice notes

THIS PRACTICE NOTE APPLIES TO defined benefit (DB) OCCUPATIONAL PENSION SCHEMES

A contingent debt is an obligation that depends on a future event occurring. It is not payable straightaway but may fall due later and is capable of proof in insolvency proceedings.

Trustees’ unilateral powers

Under a scheme’s trust deed and rules, DB trustees may hold certain powers that they can exercise unilaterally where the scheme is underfunded. These include:

setting the scheme’s contribution rates (however, owing to overriding provisions in the Pensions Act 2004 concerning DB funding, trustees will ordinarily need the employer’s consent when agreeing the schedule of contributions, save in specific prescribed situations where consulting the employer suffices). For more information, see Practice Note: Statutory funding regime and the interaction with scheme rules)
commissioning an early valuation, or
winding up the scheme

In particular, the trust deed and rules may provide that the trustees’ unilateral power to wind up the scheme is triggered by certain specified events, including:

on a change of control of the

...

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Web page updated on 21/05/2026

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