Occupational Pensions and TUPE: Change from 6 April

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.