Occupational Pensions and TUPE: Change from 6 April

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Posted on 18 Mar 2014

Transferee employers will have the option of matching the pension contributions made by the transferor, as an alternative to the current requirement to match employee contributions up to 6%. 

The change to pension protection for employees in an occupational pension scheme who transfer to a new employer under TUPE is being made as a result of auto-enrolment obligations. The Government considers the change is necessary as otherwise employees could be placed in a more favourable position as a result of a TUPE transfer. For example, if a transferor’s obligation under the auto-enrolment regime is to pay an employer contribution of 1%, the employee could require the transferee employer to pay a contribution of up to 6% if the employee elected to increase their own contribution. From 6 April, the transferee employer will be able to opt to pay the 1% contribution paid by the transferor employer instead.

 No changes have been made in respect of defined benefit schemes.

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