Changes To UK Pensions Section 75 Debt Regime

In a UK multi-employer pension plan, when a participating employer ceases to participate in the plan at a time when one or more of the other employers continue to participate (which in this context means continuing to employ active members who are accruing benefits under the plan), it triggers the departing employer's Section 75 Debt. This commonly occurs when an employer is sold but the pension plan and the other plan employers remain behind with the seller. The Section 75 Debt, referring to Section 75 of the Pensions Act 1995, will, unless alternative arrangements are put in place, be the departing employer's share of the plan's deficit, calculated on the full buy-out/insolvency basis. The buy-out deficit is calculated by determining the level of funding required for all the plan benefits to be bought out immediately with an insurance company. As this allows no opportunity for future contributions from the employer or investment return, the buy-out deficit is often