TUPE and Pensions
The TUPE laws only apply to employers who provide employees
with membership of occupational pension schemes (i.e. Defined
Benefit or Occupational Money Purchase schemes).
If an employee is transferred under the TUPE regulations and
they were a member (or they were eligible to become a member) of
their former employer's occupational pension scheme, then their new
employer must provide them with access to one of the following:
- A Defined Benefit scheme (e.g. final salary) which satisfies
the standard required to contract out of the State Second Pension;
or
- A scheme which provides benefits based on an
employer contribution of at least 6% plus any member contributions;
or
- A money purchase scheme (including
stakeholder schemes) in which the employer agrees to match the
contribution made by the employee up to at least 6% of their basic
pay
The new employer must make a pension scheme available from the
date of the TUPE transfer (or the end of the waiting period, if
applicable).
The employee and their new employer can agree to opt out of
these obligations and agree alternative arrangements at any time
after the transfer of employment takes place.
The TUPE rules on pension rights do not apply to members of
non-occupational pension schemes, such as Group Personal Pensions
and Stakeholder Pensions.
However, if the previous employer had a contractual obligation
to pay a certain level of contribution into a non-occupational
pension plan, then that obligation transfers to the new employer
along with other contractual terms and conditions.