LRD guides and handbook February 2014

TUPE - a guide to using the law for union reps

Chapter 5

Pensions

[ch 5: pages 67-68]

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

New laws were introduced on 6 April 2005. These new laws only apply to employers who provide employees with membership of an occupational pension scheme (i.e. money purchase, final salary or career average).

Under the Pensions Act 2004 and the Transfer of Employment (Pension Protection) Regulations 2005, if the old employer provided a pension scheme, the new employer must also provide some form of pension for those who were eligible to join. It does not have to be equivalent, but it must be of a minimum standard, matching employee contributions up to a maximum of six per cent of salary.