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Pensions (Personal pension scheme (Group personal pension scheme,…
Pensions
Personal pension scheme
Group personal pension scheme
Stakeholder pension scheme
National Employment Savings Trust
Occupational pension scheme
Defined benefit schemes (final salary)
Defined contribution scheme (money purchase)
Obligations following a TUPE transfer
Regulation 10 TUPE: Buyer does not take on any contractual liability which the seller may have had to provide benefits relating to old age, invalidity or survivors ("pensions exception")
Beckmann v Dynamco Whicheloe Macfarlane Ltd: Pension enhancements payable on redundancy or voluntary severance do not fall within the pensions exception ie. DO transfer
The Procter & Gamble Company v Svenska: pensions exception includes rights to retire early
UNCLEAR what enhanced benefits will transfer. Buyer should ask the seller to indemnify it
Subject to Transfer of Employment (Pension Protection) Regulations 2005
Buyers should make a certain minimum pension provision for those who would have been eligible to be active members of an
occupational pension scheme
before the transfer
No obligation to match the scheme
Where the seller's scheme was a
final salary scheme
, the employee automatically qualifies for protection
Buyer can decide which type of scheme to offer. Most will choose to provide a money purchase scheme
Must comply with the Pension Protection Regulations. The Buyer can choose
Matching the employee's contributions up to a maximum of 6%
Matching the seller's contributions (usually lower than 6%)
Where the seller's scheme was a
money purchase scheme
, employee only qualifies for protection if the seller was obliged to make employer contributions voluntarily (or had voluntarily made contributions in the past)
Rights in respect of a
personal scheme
DO transfer
Obligations following a SHARE sale
Single employer occupational pension scheme
Remains with target (no practical effect)
Multi-employer occupational pension scheme
If a
final salary scheme
is deficit, gives rise to a s. 75 liability if company leaves the group (ie. ceases to participate). Liability DOES transfer
Benefit of a pension scheme
Tax efficient ie. relief from income tax (as opposed to income from salary)