What is TUPE, and does my pension transfer with my job when my employer changes?

Full answer

TUPE protects employees when the business or part of the business they work for is transferred to a new employer — whether through a company sale, a change of contractor for an outsourced service, or certain other business reorganisations — by automatically transferring their employment to the new employer on their existing terms and conditions, preserving their continuity of service as if they had always worked for the new employer, and generally prohibiting the new employer from making transfer-related dismissals or unfavourable changes to terms because of the transfer itself. However, pension rights are explicitly excluded from most of TUPE's usual protection of automatically transferring all existing contractual terms unchanged — this exception exists because pension schemes (particularly older defined benefit schemes) can be extremely expensive and administratively complex for a new employer to take on exactly as they were, and requiring this could discourage business transfers and outsourcing altogether. Instead, UK law imposes a more limited minimum pension obligation on the new employer: broadly, if the transferring employee was in an occupational pension scheme with the old employer, the new employer must provide access to at least a scheme meeting a minimum standard — commonly interpreted as matching the qualifying earnings and minimum contribution rates required under auto-enrolment (currently 8% total minimum contribution, with at least 3% from the employer), or, in some cases, matching the employee's own previous contribution rate on a pound-for-pound employer matching basis up to 6% of pay, whichever mechanism applies to the specific transfer. This means employees moving employer via TUPE, particularly those previously in a generous defined benefit or high-contribution defined contribution scheme, can see their new employer's pension provision be considerably less generous than what they had before, entirely lawfully, since only this minimum standard (not full replication of the old scheme) is legally required. Employees facing a TUPE transfer with valuable existing pension benefits should check the specific pension terms being offered by the new employer carefully during the consultation process, and consider negotiating or raising concerns collectively (often through a trade union or employee representatives) if the pension provision is significantly reduced, since this is one of relatively few areas where TUPE genuinely does allow a material downgrade in terms. Use the Pension and Auto-Enrolment calculators to compare your old and new pension contribution levels.

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