What pension obligations transfer under TUPE 


Before 6 April 2005, where a business changed ownership there was no obligation on the new employer to provide membership of a similar occupational pension scheme to that provided by the old employer, or even to allow transferring employees into its existing scheme, unless this was specified in the Sale and Purchase Agreement. The only legal obligation on the new employer was to allow voluntary access to a designated stakeholder pension scheme. The new employer did not have to contribute its own money to that scheme. 


The law changed on 6 April 2005 and applied to all employers who provide employees with membership of an occupational pension scheme (which can be a money purchase, final salary or career average scheme), introducing minimum standards for employees affected by a transfer. These minimum standards were adjusted in April 2014 to take account of pension auto-enrolment (see Chapter 4).


The minimum standards are as follows:


• If the old employer provided an occupational pension scheme, the new employer must provide some form of pension for eligible employees. It need not be on the same terms and conditions, but it must meet certain minimum obligations. Transferring employees must be offered either:


◊ A salary-related occupational pension scheme where the new employer pays a minimum level of contributions of 6% of pensionable salary; 


◊ A defined contribution pension scheme or stakeholder scheme where the new employer must match the contributions the member chooses to make, up to a maximum of 6% of basic pay; or


◊ From 6 April 2014, to fit with pensions auto-enrolment, where the old employer paid contributions into a defined contribution pension scheme, by paying contributions that match or exceed those paid by the previous employer immediately before the transfer. This will enable new employers following a TUPE transfer to pay the lower level minimum contribution that is currently required under auto-enrolment rules, but only if that was the level of contribution that was being paid by the old employer. 


These minimum standards are found in the Pensions Act 2004 and the Transfer of Employment (Pension Protection) Regulations 2005 (TEPPR 05), amended by the Occupational Pension Schemes (Miscellaneous Amendments) Regulations 2014. 


There is more information on the website of the Pensions Advisory Service (TPAS) (www.pensionsadvisoryservice.org.uk). TPAS is an independent organisation of pension specialists, grant-aided by the Department for Work and Pensions.