What happens to a pension scheme on a company’s insolvency?
Produced in partnership with Thomas Robinson of Wilberforce Chambers
Practice notesWhat happens to a pension scheme on a company’s insolvency?
Produced in partnership with Thomas Robinson of Wilberforce Chambers
Practice notes
This Practice Note considers the effect of a company’s insolvency on an occupational pension scheme in respect of which the company is the sponsoring employer. It also notes consequences if the company is the trustee of the scheme. It does not consider multi-employer schemes.
Types of pension scheme
A company’s pension scheme will most usually be either a defined benefit (DB) (usually ‘final salary’, sometimes ‘career average’, depending on the method used for calculating benefits) scheme or a defined contribution (DC) scheme—a ‘money purchase’ scheme. The impact of an employer’s insolvency on a scheme is significantly different depending on whether the scheme is DB or DC. This Practice Note considers common factors first, then turns to DB schemes.
For more information on pension schemes, see Practice Note: Types of pension arrangements for employees available in the Lexis+® UK Pensions module (a subscription may be required).
Initial steps on a company’s insolvency from a pensions perspective
Notification obligations on the IP
Where an insolvency practitioner (IP) begins to act in relation to
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Jurisdiction(s):
United Kingdom
Related legal acts:
Key definition:
Pension scheme definition
What does Pension scheme mean?
A pension scheme is a scheme or other arrangement which is comprised in one or more instruments or agreements, having or capable of having effect so as to provide benefits to or in respect of persons on retirement, on death, on having reached a particular age, on the onset of serious ill-health or incapacity or in similar circumstances.
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