Managing the risk of an s75 Debt on the Employer in a Company Insolvency or MVL
A s75 pension debt is a legal obligation that arises under UK pensions law and can be triggered by events such as
- the insolvency of the sponsoring employer
- the last member leaving the Scheme or
- a Members Voluntary Liquidation
If a company becomes insolvent and triggers a s75 pension debt, the debt, which can be significant, will be presented by the scheme’s trustees to the Insolvency Practitioner as an unsecured claim.
As an insolvency practitioner, it’s important to understand the nature of the pension scheme and the potential of a s75 debt, particularly if the Scheme isn’t eligible for entry to the Pension Protection Fund (PPF). Such examples would be:
- any company entering a Members Voluntary Liquidation and/or
- any company that belongs to a multi-employer Defined Benefit Scheme
There are various multi-employer schemes often associated with Universities, Charities, Plumbing & Mechanical, NHS or Companies that work on council contracts, so particular caution should be applied to such companies.
In the past, we have seen cases where shareholders expect to be paid a significant distribution only to see such a distribution disappear when the Trustees of a multi-employer Defined Benefit Scheme serve an unsecured s75 Debt on the Employer.
Overall, as an insolvency practitioner, it’s essential to stay informed about the potential impact of insolvency on pension plans and s75 pension debts.
All is not lost…
Finding company pension schemes and adequately dealing with them is a regulatory requirement for IPs, but help is at hand. At Clumber, we have significant experience dealing with such schemes, and just like insolvency, the earlier you talk to us, the better the outcome we can achieve.
If you’d like us to help you navigate this aspect of your appointment, then just call us on 01623 203350 or send us a message via our website form.
