Pensions Act 2004

Pension protection on transfer of employment E+W+S

257 Conditions for pension protection E+W+S

(1) This section applies in relation to a person (“the employee”) where—

[F1 (a) there is a relevant transfer within the meaning of the TUPE regulations,]

(b) by virtue of the transfer the employee ceases to be employed by the transferor and becomes employed by the transferee, and

(c) at the time immediately before the employee becomes employed by the transferee—

(i) there is an occupational pension scheme (“the scheme”) in relation to which the transferor is the employer, and

(ii) one of subsections (2), (3) and (4) applies.

(2) This subsection applies where—

(a) the employee is an active member of the scheme, and

(b) if any of the benefits that may be provided under the scheme are money purchase benefits—

(i) the transferor is required to make contributions to the scheme in respect of the employee, or

(ii) the transferor is not so required but has made one or more such contributions.

(3) This subsection applies where—

(a) the employee is not an active member of the scheme but is eligible to be such a member, and

(b) if any of the benefits that may be provided under the scheme are money purchase benefits, the transferor would have been required to make contributions to the scheme in respect of the employee if the employee had been an active member of it.

(4) This subsection applies where—

(a) the employee is not an active member of the scheme, nor eligible to be such a member, but would have been an active member of the scheme or eligible to be such a member if, after the date on which he became employed by the transferor, he had been employed by the transferor for a longer period, and

(b) if any of the benefits that may be provided under the scheme are money purchase benefits, the transferor would have been required to make contributions to the scheme in respect of the employee if the employee had been an active member of it.

(5) For the purposes of this section, the condition in subsection (1)(c) is to be regarded as satisfied in any case where it would have been satisfied but for any action taken by the transferor by reason of the transfer.

F2 (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7) In the case of a scheme which is contracted-out by virtue of section 9 of the Pension Schemes Act 1993 (c. 48), the references in subsections (2)(b), (3)(b) and (4)(b) to contributions mean contributions other than minimum payments (within the meaning of that Act).

(8) In this section—

• the “TUPE Regulations” means the [F3 Transfer of Undertakings (Protection of Employment) Regulations 2006] ;

• references to the transferor include any associate of the transferor, and section 435 of the Insolvency Act 1986 (c. 45) applies for the purposes of this section as it applies for the purposes of that Act.

Textual Amendments

F1 S. 257(1)(a) substituted (with application in accordance with reg. 21(1) of the amending S.I.) by The Transfer of Undertakings (Protection of Employment) Regulations 2006 (S.I. 2006/246), reg. 1(2), Sch. 2 para. 13(2)

F2 S. 257(6) omitted (with application in accordance with reg. 21(1) of the amending S.I.) by virtue of The Transfer of Undertakings (Protection of Employment) Regulations 2006 (S.I. 2006/246), reg. 1(2), Sch. 2 para. 13(3)

F3 Words in s. 257(8) substituted (with application in accordance with reg. 21(1) of the amending S.I.) by The Transfer of Undertakings (Protection of Employment) Regulations 2006 (S.I. 2006/246), reg. 1(2), Sch. 2 para. 13(4)

Commencement Information

I1 S. 257 in force at 6.4.2005 by S.I. 2005/275, art. 2(7), Sch. Pt. 7

258 Form of protection E+W+S

(1) In a case where section 257 applies, it is a condition of the employee’s contract of employment with the transferee that the requirements in subsection (2) or the requirement in subsection (3) are complied with.

(2) The requirements in this subsection are that—

(a) the transferee secures that, as from the relevant time, the employee is, or is eligible to be, an active member of an occupational pension scheme in relation to which the transferee is the employer, and

(b) in a case where the scheme is a money purchase scheme, as from the relevant time—

(i) the transferee makes relevant contributions to the scheme in respect of the employee, or

(ii) if the employee is not an active member of the scheme but is eligible to be such a member, the transferee would be required to make such contributions if the employee were an active member, and

(c) in a case where the scheme is not a money purchase scheme, as from the relevant time the scheme—

(i) satisfies the statutory standard referred to in section 12A of the Pension Schemes Act 1993 (c. 48), or

(ii) if regulations so provide, complies with such other requirements as may be prescribed.

(3) The requirement in this subsection is that, as from the relevant time, the transferee makes relevant contributions to a stakeholder pension scheme of which the employee is a member.

(4) The requirement in subsection (3) is for the purposes of this section to be regarded as complied with by the transferee during any period in relation to which the condition in subsection (5) is satisfied.

(5) The condition in this subsection is that the transferee has offered to make relevant contributions to a stakeholder pension scheme of which the employee is eligible to be a member (and the transferee has not withdrawn the offer).

(6) Subsection (1) does not apply in relation to a contract if or to the extent that the employee and the transferee so agree at any time after the time when the employee becomes employed by the transferee.

(7) In this section—

• “the relevant time” means—

  (a)

  in a case where section 257 applies by virtue of the application of subsection (2) or (3) of that section, the time when the employee becomes employed by the transferee;

  (b)

  in a case where that section applies by virtue of the application of subsection (4) of that section, the time at which the employee would have been a member of the scheme referred to in subsection (1)(c)(i) of that section or (if earlier) would have been eligible to be such a member;

• “relevant contributions” means such contributions in respect of such period or periods as may be prescribed;

• “stakeholder pension scheme” means a pension scheme which is registered under section 2 of the Welfare Reform and Pensions Act 1999 (c. 30).

Commencement Information

I2 S. 258(1)(2)(a)(b)(c)(i)(3)-(6) in force at 6.4.2005 by S.I. 2005/275, art. 2(7), Sch. Pt. 7

I3 S. 258(2)(c)(ii) in force for the purpose only of conferring power to make regulations, orders or rules, as the case may be, 10.2.2005; and for all other purposes at 6.4.2005 in so far as not already in force by S.I. 2005/275, art. 2(3), Sch. Pt. 3

I4 S. 258(7) in force in so far as it relates to the definition of "relevant contributions" for the purpose only of conferring power to make regulations, orders or rules, as the case may be, 10.2.2005; and for all other purposes in relation to that definition at 6.4.2005 for specified purposes by S.I. 2005/275, art. 2(3), Sch. Pt. 3

I5 S. 258(7) in force in so far as not already in force at 6.4.2005 by S.I. 2005/275, art. 2(7), Sch. Pt. 7