What is TUPE and how will my pension be affected?

TUPE refers to the ‘Transfer of Undertakings (Protection of Employment) Regulations 2006’.  These regulations are designed to protect the employment rights of employees who are affected by a business change; for example, when a business or undertaking is transferred to another employer.  This applies to any organisation, regardless of size, that operates within the United Kingdom. 

TUPE falls under employment law and typically covers pay and holiday, but not pensions.  However, there are Government measures which sit alongside TUPE to ensure that your Local Government Pension Scheme (LGPS) pension is protected if your job is transferred to another employer.

We have produced the following frequently asked questions which outline the TUPE process in more detail and what it means for your pension.

When does TUPE apply?

There are two situations when the TUPE regulations may apply:

Business transfers – The TUPE regulations may apply if a business or part of a business moves to a new owner or merges to create a new entity.

Service provision transfers – The TUPE regulations may also apply when:

  • A service provided by an employer in the Fund is ‘outsourced’ to a contractor (known as outsourcing)
  • A new contractor takes over activities from another contractor (known as re-tendering)
  • The original employer brings a contracted service back in-house (known as in-sourcing)

 

How will my pension be affected?

How your pension is affected depends on who you currently work for and where your contract is being transferred to.

  • If you currently work for an academy or college, and your contract is being transferred to a private contractor under an outsourcing arrangement, then you will be entitled to continue as a member of the LGPS through an admission agreement arranged with the Avon Pension Fund by the academy/college.  Once the admission agreement is in place, your pension record will automatically be moved to the new employer within the LGPS.
  • If you work for a local authority and your contract is being transferred to an employer that already offers membership of the LGPS, then you will be automatically admitted to the LGPS. Your pension record will automatically be moved to the new employer within the LGPS.
  • If you currently work for a local authority school that is becoming an academy, then you will be automatically admitted to the LGPS with your new employer at the date of transfer.  Your pension will be automatically moved to the new employer within the LGPS.
  • If you currently work for a local authority and your contract is being transferred to a private contractor, then you must be offered either:
    • Continuing membership of the LGPS via an admission agreement. The local authority arranges this agreement with the Avon Pension Fund.
    • Membership of a broadly comparable pension scheme. This is a scheme which offers benefits which are “broadly comparable” with the LGPS. Your new employer provides this scheme and will give you all the relevant information. (for various reasons, this means of pension protection is becoming increasingly uncommon).

For LGPS pension protection to apply, you will need to have been employed by a local government employer (principally local authorities and academies) before the initial transfer. Your protection will continue where there are subsequent transfers (e.g. whenever there is a change of contractor in the case of an outsourcing) provided that your employment is continuous. Please consult the Avon Pension Fund immediately if you are not being offered pensions protection in relation to an outsourcing or if you have any queries on the above.

What is the TUPE process?

As part of the TUPE consultation requirements, your current employer must ensure that your new employer has adequate pension arrangements.

In the case of an outsourcing, your current employer (if it is a local authority) will tell you whether the new employer will provide either a broadly comparable scheme or continuing membership in the LGPS via an admission agreement.

If you have been offered a broadly comparable scheme you will be told of details of that scheme and you will be given a form for you to tell your employer and us that you wish to:

  • transfer your LGPS pension rights to that scheme, or
  • retain your pension rights in the LGPS. If you have more than 2 years membership you are awarded a deferred pension in the LGPS which increases with the cost of living and is payable at your normal pension age. If you have less than 2 years membership, you may choose to receive a refund of your contributions less a deduction for tax.

The case for transferring your LGPS pension rights to a broadly comparable scheme is now far less obvious given that the LGPS is now a “career average” scheme rather than a final salary scheme. Furthermore, your LGPS pension is statutorily protected whereas a broadly comparable scheme does not have this advantage.

If you have been offered continuing membership in the LGPS you do not need to take any action as your pension record will be automatically transferred to your new employer once an admission agreement has been put in place (protecting rights from the date of transfer).

What happens if my job gets transferred to another employer again?

The process starts again, and your future pension may be protected through the offer of further membership in the LGPS or through a broadly comparable pension scheme. You will have choices again regarding the pension you have built up.

If you are unsure about the impact, in any way, of your job transferring to another employer you should speak to your line manager or HR representative.