Jurisdiction(s):
United Kingdom

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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...

Withdrawal and Approved Withdrawal Arrangements in Multi‑Employer Defined Benefit Occupational Pension Schemes: Section 75 Debt Alternatives, Trustee Funding Test, Actuarial Certification, Regulator Approval and Guarantor Duties

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Practice notes

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

Withdrawal arrangements give exiting employers of underfunded defined benefit occupational pension schemes an alternative to paying in full the statutory debt arising under the Pensions Act 1995, s 75 (a s 75 debt) when an employment-cessation event occurs.

Following such an event, a s 75 debt becomes due from the exiting employer to the scheme. In a multi-employer scheme, the exiting employer’s s 75 debt is its liability share—its portion of the scheme deficit calculated on a buy-out basis.

A withdrawal arrangement is a contractual commitment between the exiting employer, the scheme trustees and a guarantor. Under this arrangement, the exiting employer pays less than the full s 75 amount, and a guarantor undertakes to cover the remaining balance at a later time (eg when the scheme winds up).

These arrangements are akin to apportionment arrangements in that both address the exit of an employer from a multi-employer scheme. However, there are notable differences. For further information, see Practice Note: Apportionment arrangements...

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Web page updated on 22/05/2026

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