Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Insolvency definition

What does Insolvency mean? In practice, insolvency describes a financial state where a debtor cannot meet liabilities when due, triggering remedies such as administration, liquidation or bankruptcy and informing directors’ duties and avoidance claims. For companies in England & Wales, Scotland and Northern Ireland, the Insolvency Act 1986, s 123 sets two alternative tests: - Cash‑flow insolvency: an inability to pay debts as they fall due. The inquiry is practical and forward‑looking, not confined to today’s bills (Re Patrick & Lyon Ltd [1933] Ch 786; BNY Corporate Trustee Services Ltd v Eurosail [2013] UKSC 28). - Balance‑sheet insolvency: liabilities (including contingent and prospective liabilities) exceed assets on...

Recovering section 75 employer debts in defined benefit schemes: triggers, calculation and certification, claims, limitation and enforcement

Published by a LexisNexis Pensions expert

Practice notes

Trustees should be alert to circumstances that can trigger a debt under section 75 of the Pensions Act 1995, so they understand:

when such a liability crystallises, and
when they must act to have it assessed and recovered

They have a general obligation to reclaim their scheme’s assets. If they fail to act properly, and without undue delay, to recover an outstanding sum, this may amount to a Breach of trust and could expose them to claims for any loss suffered.

For more on Disputes that members may bring under occupational or personal pension schemes, see Practice Note: Pension disputes—avenues available to scheme members; and for trustee protections, see Practice Note: Trustee liability and protection in pensions.

When does a section 75 debt arise?

In summary, a section 75 debt becomes payable to an underfunded defined benefit scheme when:

the scheme is wound up
the employer is insolvent for section 75 purposes or enters a member’s voluntary liquidation
an employer in a multi-employer scheme that is open to future accrual stops participating in the...

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Mark Ridler

Hill Dickinson

Mark is a legal director at Hill Dickinson. He qualified as a solicitor in 1986 and, after initially specialising as a corporate lawyer, has advised pension scheme trustees and corporate clients for over 20 years on a wide range of pension matters, including: resolving historic errors in pension documentation; drafting and updating pension scheme documentation; the pensions aspects of corporate transactions and restructuring; the closure, wind up and merger of pension schemes; Pensions Regulator proceedings; the Local Government Pension Scheme; fiduciary management agreements; and auto-enrolment.Chambers 2013 says that Mark is noted for his wide-ranging experience of pensions law and that one peer states: "He's technically very able" and clients have noted in Chambers that Mark offers “good, strong, pragmatic” advice....

Web page updated on 21/05/2026

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