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Closing your scheme

Information for employers on closing a pension scheme to new members or future accruals, and winding up a scheme.

As an employer, if you are intending to close the scheme to either new members or future accruals, or to wind up the scheme, you will need to provide all relevant information to the trustees or managers of your scheme and ensure compliance with the applicable legal requirements.

Key points

  • If you’re considering closing a pension scheme to either new members or to future accruals, you should discuss this with the trustees or managers of your pension scheme to understand any changes that may be required to the trust deed and rules of the scheme to effect this change and, if applicable, undertake a consultation with the affected members of the scheme.
  • If you’re winding up a defined benefit (DB) scheme you need to understand what the consequences are and whether a debt under section 75 of the Pensions Act 1995 (section 75 debt) may become due.

Closing a scheme to new members or future accruals

If you're considering closing your scheme to new members or to further benefit accruals, whether it be a DB or defined contribution (DC) scheme, these should be discussed with the trustees or managers of your pension scheme.

The scheme’s trust deed or rules may require amendment to effect this change and, depending on how many employees you have, as the employer you may also be required to consult affected employees before making these changes as they are considered 'listed changes' under the applicable regulations.

The duty to consult on scheme changes provides information to help employers comply with the legal requirements that surround the process of making certain changes that affect pension schemes.

The employer duty to consult is set out in sections 259-261 of the Pensions Act 2004, the Occupational and Personal Pension Schemes (Consultation by Employers and Miscellaneous Amendment) Regulations 2006 as amended, and the Occupational Pension Schemes (Consultation by Employers) (Modification for Multi-employer Schemes) Regulations 2006.

For further detailed information about the regulations and compliance with them, please refer to the Department for Work and Pensions (DWP) guidance on the National Archives website.

Winding up a scheme

Winding up a pension scheme can be a complicated process which varies from scheme to scheme.

If you're considering winding up the pension scheme, you should discuss this with the trustees or scheme managers, who are responsible for informing The Pensions Regulator of the wind up and ensuring it is undertaken in an orderly manner.

For more information see our winding up regulatory guidance.

In the case of a multi-employer pension scheme, a scheme’s trust deed and rules may provide for partial wind up when an employer departs from the scheme, and legal advice may be required to determine the impact of this, particularly if you have a DB scheme.

For a DB scheme, one of the consequences of triggering wind up is that a section 75 debt may become due from the employer(s) if the scheme has a shortfall. A section 75 debt is generally the amount that it will cost the scheme to buy annuities to secure members’ benefits in full. After a scheme begins winding up, the trustees are usually obliged to ensure that section 75 debts are calculated and to seek to collect those debts.

Automatic enrolment duties

If you no longer employ anyone, see what if I don't have any staff?