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...

sectionalised (segregated) DB/hybrid occupational pension schemes—funding, PPF levy/entry, section 75 employer debt and winding-up

Published by a LexisNexis Pensions expert

Practice notes

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THIS PRACTICE NOTE APPLIES ONLY TO defined benefit AND HYBRID OCCUPATIONAL PENSION SCHEMES

What is a 'sectionalised' pension scheme?

A pension scheme can be set up in several different ways and configurations. For example, it might take the following forms:

include more than one participating employer within the same arrangement and establish distinct benefit designs for members employed by different employers
originate from earlier mergers or bulk transfers of members’ benefits arising out of corporate transactions, leaving a single sponsoring employer but retaining rules under which different groups of members receive different benefits
provide both earlier, historic defined benefits together with more recent defined contribution benefits
operate as an industry-wide arrangement that permits multiple employers to participate, each with its own section delivering benefits to its own employees

The rules of the scheme may then expressly state:

that the scheme’s assets are held and administered as one overall fund and, therefore, cross-subsidy between the different sections is permitted; or
that each section’s assets must be held and administered entirely separately and used only and exclusively for the benefit of that section’s members, with no scope for any cross-subsidy between sections

If a scheme’s rules provide...

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Web page updated on 21/05/2026

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