How does insolvency affect pensions?

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What happens to the assets in a pension scheme on a company insolvency?

On a company’s insolvency the funds in its pension scheme do not automatically form part of the assets of the company. They are not automatically available to pay the company’s creditors unless an office-holder has an action against the scheme for the return of funds, for example if a transaction at an undervalue or preference transaction has occurred. For further reading on such claims, see: Claims by an insolvent estate or its insolvency office-holder—overview.

An insolvency practitioner appointed over the company must give notice of the insolvency to the Pensions Regulator, the Pension Protection Fund and the trustees or managers of the pension scheme. For more detailed information, see Practice Note: What happens to a pension scheme on a company’s insolvency?

What if there are employer or employee contribution arrears at the insolvency date?

Employee contributions

If the insolvent employer has deducted contributions to a defined benefit or defined contribution scheme from an employee’s pay in the four months before its insolvency, but failed to pay them to the scheme, the amount

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