TUPE

The DWP has issued a condoc on draft Transfer of Undertakings (Pension Protection) Regulations 2005, made under ss.257 - 258 of the Pensions Act 2004.

Section 258 requires that, where there is a business transfer to which TUPE Regulations apply, and employees had access to an occupational pension with employer contributions prior to the transfer, then the transferee employer must offer a transferred employee membership of either:

1. a defined benefit OPS which meets the Reference Scheme Test (PSA 93 s.12A, inserted by PA 95 s.136(5)) or "such other requirements as may be prescribed"; or
2. a money purchase OPS or stakeholder pension arrangement to which the employer must make "relevant contributions".

The draft Regulations provide that:

1. the alternative requirement which a transferee employer's DB scheme must meet is that it must provide benefits which are of overall equivalent value to that which the transferor's scheme provided (if the transferor's scheme exceeded the RST requirements, however, then the transferee does not need to better the RST).
2. "Relevant contributions" to a money purchase pension scheme or stakeholder pension arrangement: the transferee employer must match employees' contributions up to 6% based on gross basic pay, calculated each time remuneration is paid to the employee.

The Regs are designed to come into force on 6 April 2005.

This consultation closes on 21 January 2005.

Code of practice - Reporting breaches of the law

At the same time, elsewhere on the DWP website the first of an expected series of draft Codes of Practice has been issued for consultation, under the name of The Pension Regulator.

This amplifies Opra's current guidance on whistleblowing under s.48 of the Pensions Act 1995, including the 'traffic light' framework for voluntary whistleblowers set out in Opra Note 6 (Opra previously consulted a year ago on a draft revision of this (see Aries article), which is based in turn on the guidance for statutory reporters in Opra Note 1 (see Aries report).

The point is that s.70 of the 2004 Pensions Act extends the obligation to report breaches of the law relevant to The Pensions Regulator to trustees, managers, scheme administrators, employers, and all advisers of work-based pension schemes. It covers both occupational and personal pension schemes. Reporters must make two key judgements:

1. is there reasonable cause to believe there has been a breach in the law; and
2. if so, is the breach likely to be of material significance to The Pensions Regulator?

The condoc notes that
"Codes of practice are not statements of the law and there is no penalty for failing to comply with them. Nevertheless, codes have legal effect; they must be taken into account by the Regulator, a court or tribunal if they are relevant to what is being decided."