How Transfer of Undertakings Protection of Employment regulations (TUPE) affects your pension

If your employer is making changes that could affect your pension, your employment rights and the terms and conditions on your current pension should be protected by TUPE.

What is TUPE?

The Transfer of Undertakings (Protection of Employment) regulations 2006 (known as TUPE) are designed to protect the employment rights of employees who are affected by a business change, for example when companies merge. The general principle under TUPE is that employees will have the same rights with the new employer. This is not pensions law, it is employment law.

If your employer is taken over or merges with another company or your role is outsourced to another employer, and you remain in employment, the pension benefits you've already built up in a workplace pension scheme are protected. Different rules apply to private and public sector transfers as to what your new employer must provide in the future.

When do the TUPE rules apply?

In essence, TUPE applies when the business has been transferred from one employer to another. There are three key elements:

  • there is a ‘relevant business transfer’. This means that a business (or part of it) has changed hands but kept its identity. The old employer’s rights, powers, duties and liabilities are transferred to the new employer; and
  • the employee stops working for the old employer and starts working for the new employer; and
  • immediately before the transfer, the employee was an active member of the pension scheme, or eligible to join it, or would be eligible after a period of time.

TUPE may also apply when there is a ‘service provision change’. For example, an employer outsources to a contractor, a new contractor takes over activities from another contractor, or an employer takes activities back in-house from a contractor (‘insourcing’).

When does TUPE not apply?

An example of when TUPE does not normally apply is when there has been a sale of shares in a company which owns the business, since this involves no change in the identity of the employer.

The TUPE regulations may protect the pension benefits you have already built up if your employer is taken over and merges with another company

How are pension rights affected in the private sector?

The new company employing you doesn't have to offer the same terms and conditions for their new pension scheme. What they must offer depends on your old employer’s pension arrangements:

What your employers must offer
Old employer
New employer must offer

Defined contribution workplace scheme (includes many automatic enrolment schemes)    

Defined contribution scheme where employer contributions match employee contributions up to 6% of basic pay, or Defined contribution scheme (either workplace or stakeholder pension) where employer contributions match the level of contributions the old employer made, or Defined benefit scheme which provides a specified level of pension. 

Contractual entitlement to employer contributions to personal or stakeholder pension

Defined contribution scheme where employer contributions match the level of contributions the old employer had to pay.

Defined benefit scheme

Defined benefit scheme which provides a specified level of pension, or Defined contribution scheme (either workplace or stakeholder scheme) where employer contributions match employee contributions up to 6% of basic pay.

In all cases, the new employer must ensure that, whichever pension scheme they offer, it meets the automatic enrolment minimum standards.

How are pension rights affected in the public sector?

What your new employer must offer depends on whether you work for central government departments/under the control of government ministers or you work for a local authority or some other localised public service.

What your employers must offer
Old employer
New employer must offer

Central government, NHS or other agency subject to ‘Fair Deal’/’New Fair Deal’ terms.

A public sector scheme (in exceptional circumstances, an occupational scheme which is broadly comparable to the public sector scheme may be offered instead).

Local authorities and some other localised bodies.

Either a public sector scheme or an occupational scheme that is broadly comparable to the public sector scheme.

What if I am already receiving my pension?

If you’re already receiving a pension from your scheme, these should not be affected by a take-over, merger or outsourcing.

Where can I find out more?

The ACAS Helpline number is 0300 123 1100 and is available Monday to Friday 8am-6pm. 

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