The government has issued yet another consultation document, this time looking at pension protection contributions for employees in occupational pension schemes who are the subject of a TUPE transfer to another employer.
It says that the wording in the Transfer of Employment (Pension Protection) Regulations 2005 requiring the new employer to make “relevant contributions” into the transferring employee’s scheme does not explicitly give the employee the right to choose their rate of contribution.
As the original policy intention was to allow them to do so, the government is proposing that the 2005 regulations should now be amended to confirm the right of employees to choose the level of their own contributions (subject to any minima in the scheme rules) which must be matched by the employer up to a maximum of six per cent.
Having given employees that right, however, the government says it needs to amend the Occupational and Personal Pension Schemes (Automatic Enrolment) Regulations 2010, (effective from July 2012) which specify a minimum level of employer contribution to avoid any “unintended consequences” with the requirements of the 2005 regulations.
It is therefore proposing that transferee employers should be able to satisfy the “relevant contributions” provisions by matching the contributions paid by the transferor immediately prior to the transfer as an alternative to matching the level of contributions chosen by the employee. It would be for the transferee to decide how they will meet their pension protection obligations.
The consultation closes on 5 April 2013.
To read the consultation document in full, go to the Department for work & Pensions website