TUPE and Your Pension: What Protection You Actually Get When You Transfer (2026/27)

Why pensions are treated differently under TUPE

The Transfer of Undertakings (Protection of Employment) Regulations generally protect an employee's existing terms and conditions when a business, or part of a business, changes hands — the new employer typically has to honour the same pay, holiday and most other contractual terms. Pensions are a notable exception: occupational pension schemes are largely carved out of this automatic protection, on the basis that requiring a new employer to replicate an old employer's specific pension scheme in every detail would often be impractical, particularly for Defined Benefit schemes with complex funding structures.

The statutory minimum that does apply

Recognising that a complete carve-out would leave transferring employees with no pension protection at all, the law provides a minimum floor: where the old employer made any pension contribution, the new employer must either:

• Allow the employee to join an existing pension scheme, matching the employee's own contributions up to 6% of pay, or
• Make some other pension arrangement that meets the statutory equivalent requirements.

This is a genuine safety net, but it is materially less generous than many employer schemes, particularly those offering above-6% matching, non-contributory employer contributions, or Defined Benefit accrual.

Defined Benefit schemes: past rights protected, future accrual usually not

For employees who were building up rights in a Defined Benefit (final salary or career average) pension scheme before the transfer, TUPE and related pension legislation generally protect the rights already accrued — the pension built up for service completed before the transfer date remains payable according to the original scheme's rules (or an appropriately protected successor arrangement).

However, the new employer is typically not required to continue Defined Benefit accrual for future service after the transfer. Instead, going forward, employees usually move onto the statutory minimum defined-contribution-style protection described above — a significant reduction in the generosity of future pension building, even though nothing already earned is lost.

Worked illustration: contribution reduction within the law

Suppose an employee's previous employer contributed 10% of salary to their pension, with the employee contributing 5% (a combined 15%). After a TUPE transfer, the new employer offers a scheme matching the employee's contribution up to 6% — meaning if the employee also contributes 6%, the combined rate becomes 12%, a reduction of 3 percentage points compared with the previous arrangement, but one that still fully satisfies the statutory minimum protection requirement, and would not generally be considered a breach of TUPE pension protection on its own.

What employees should check immediately after a transfer

1. Request written details of the new pension scheme — provider, contribution structure, and matching rate — as soon as possible after being informed of a transfer.
2. Compare contribution rates against the previous arrangement to understand the real financial impact on long-term retirement savings, not just take-home pay.
3. Check auto-enrolment status, since the new employer must still run auto-enrolment assessments, though the specific scheme used may change.
4. Understand the Defined Benefit position specifically if applicable — clarify whether any DB accrual continues, or whether future service moves to a defined-contribution-style arrangement, since this is one of the most financially significant changes many transferring employees experience.

While a reduction to the statutory minimum is usually lawful, employees concerned about a significant overall detriment to their terms — pension included — should seek advice on whether the change, combined with other factors, could amount to a more serious breach of their employment rights.