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employer debt

In the context of pensions, the statutory debt arising under section 75 of the Pensions Act 1995. Also known as a section 75 debt, an employer that participates in a defined benefit scheme may owe an employer debt to the scheme's trustees if the scheme is underfunded. The debt arises either on the winding-up of a defined benefit scheme, or when a participating employer in a multi-employer scheme withdraws while the scheme is ongoing. It is usually calculated by reference to the buy-out cost.