A Green Light For Pension Trustees To Assign Their Section 75 Debts?

We write to update you on the recent High Court decision in Singer & Friedlander v Corbett 1which considered the circumstances in which a section 75 debt could be assigned and which provides a detailed insight into the co-operation of the section 75 debt regime and the Pensions Regulator's moral hazard powers.

Section 75

As you know section 75 of the Pensions Act 1995 ("section 75") forms part of the statutory funding regime relating to occupational pension schemes. A section 75 debt imposes a debt obligation on an employer participating in a defined benefit scheme where a relevant trigger event occurs. When a trigger event occurs, the participating employer becomes liable for some or all of the shortfall in the scheme's funding. Section 75 has existed in various forms over the years, initially as section 58B of the Social Security Pensions Act 1975, then subsequently consolidated into section 144 of the Pension Schemes Act 1993 before being enacted as section 75 of the Pensions Act 1995 from 6 April 1997.

Background

Kaupthing, Singer & Friedlander, was one of the early victims of the credit crisis entering into administration on 8 October 2008. The bank ran a defined benefit scheme which at the time of the administration was in deficit resulting in the triggering and...