TUPE & death in retirement benefit

[J.P.]

Hi,

I’m soon approaching retirement age & I have deferred pension benefit entitlements from previous employments – which amounts to approx. 26 years pensionable service with two separate employers both with defined benefit schemes, let’s call them Employer A and Employer B. I worked 13 years with Employer A, Employer A then sold the business to Employer B in 1995 and all employees transferred to Employer B under TUPE. So I worked for 26 years within the same facility, but for two separate employers. I subsequently left Employer B’s employment for an alternative employment.

I recently noticed the following issue on reviewing my combined statement of pension benefits from Employer A & B –

- The death in retirement benefit defined under Employer A’s pension scheme (i.e. 50% of my annual pension payable to my spouse) in the event of my death in retirement was not included in the statement of benefit – only Employer B’s death in retirement level of benefit was outlined ?

Employer A’s pension scheme booklet makes reference to “Leaving Employment” – it states that death benefit can be maintained under a separate policy if one leaves the employment. While I did change from Employer A to Employer B – it was not something that I initiated, Employer A sold the business as a going concern. So from my perspective, I didn’t leave Employer A, they actually left me !

So to my question, under TUPE legislation, is Employer A still liable for this death in retirement benefit ?

 

[LS400]

Employer A does not exist anymore in relation to you. Employer B inherited the previous 13 years of benefits. Effectively, you have worked 26 years for employer B.

 

[MugsGame]

However ...

Employee pension rights in relation to old age, invalidity or survivors benefits generally do not transfer to the new employment.

In other words, your time with Employer A may not now entitle you to any survivor benefits from either employer

Was this discussed during the TUPE process? Employer B should be able to clarify the situation.

 

[J.P.]

Hi LS 400 - that makes sense to me. Employer B’s pension scheme is a more generous scheme than Employer A’s scheme, so when I receive a statement of benefit from Employer B it consist of two elements –

(A). 13 years service X benefit from Employer A’s scheme – except for the Death in Retirement benefit, this currently is what is not included.

(B). 13 years service X benefit from Employer B’s scheme

The total of A & B above gives me my total level of benefit. Everything looks fine except for the Death in Retirement benefit as per Employer A’s scheme - which is missing.


Hi MugsGame - During the TUPE process, Employer A advised us that any accrued benefits would be protected & maintained – we would not be disadvantaged by joining Employer B, etc…....... ? Admittedly, they wanted out & for the sale to proceed & we as employees were more concerned at the time about our jobs, so I’m beginning to wonder if I have been *hafted unknowingly at the time ?

I queried the absence of the Death in Retirement benefit re. my 13 years Employer A service - Employer B advised that Employer A’s plan had no such benefit. The Pension scheme booklet I received on joining Employer A’s scheme outlines a death in retirement benefit of 50% of my annual pension payable to my spouse in the event of my death in retirement ?

 

[MugsGame]

I'm not sure you have legal grounds to force employer B to honour this benefit - you may need specialist advice, the cost of which might be more than the benefit is worth. I'm not an expert in this area, but I remember being surprised when I was TUPEd (and was the employee representative) that not all conditions were protected under the legislation.

How many are potentially impacted? Are you still in contact with anyone else affected, especially anyone still employed by employer B? Current employees or the group as a whole may have more sway than you as an individual.

I think you should give your evidence of death in retirement benefits from employer A to employer B. If it's a genuine mistake (rather than a deliberate decision not to honour these benefits) you may be able to get them to relent. Although it might be costly for them to rectify for anyone who has already retired.

Employer A’s pension scheme booklet makes reference to “Leaving Employment” – it states that death benefit can be maintained under a separate policy if one leaves the employment.

Could this be a reference to death in service benefit rather than death in retirement?

 

[Peanuts20]

As a starting point, unless you have a DB (and not DC) pension, then pension is normally outside of TUPE and you cannot assume any benefits you had under your previous employers pension scheme would transfer over.

 

[jpd]

The OP specifically said they were two DB schemes

 

[J.P.]

MugsGame – Thanks for that, your past experience in this area is very evident.

Going legal to force Employer B to honour this benefit : I don’t think that really is a financially viable option for me - large multinational involved, the cost of having to honour this benefit would be far more of a concern for Employer B rather than legal cost involved in silencing me.

With regard to the number of people involved – Employer A had a lot of different pension schemes, so I reckon approx. 4 people would be in the same situation as myself. I’m not in contact with any of the past colleagues in question as I left the business some 15 years ago.

I have given the evidence of the death in retirement benefit defined under Employer A’s scheme to Employer B – not received a response yet.

What I’m I expecting in response is, that the reference within Employer A’s pension scheme booklet under “Leaving Employment” will be used to justify the position, where it states that - “death benefit” can be maintained under a separate policy if one leaves the employment. This reference to “death benefit” is so vague, one could argue it any way. So I don’t think this is a mistake, but more of a deliberate decision by Employer A not to honour & provide for this death in retirement benefit & hence not to have provide funding for it at the time of the sale to Employer B ?

In my view this would be unfair, as Employer A sold the business to Employer B - so from my perspective, I didn’t leave Employer A, they offloaded me to a new employer , which I never sought out . I didn’t have much of a choice about it at the time only to transfer to Employer B if I wanted to maintain an income & provide for my family. So as I stated in an earlier post, I’m beginning to wonder more & more if I was *hafted unknowingly at the time - it's looking that way.

 

[Dave Vanian]

Could this be a reference to death in service benefit rather than death in retirement?

I think there is a bit of confusion in this thread between Death in Service benefits and Death in Retirement benefits.

Death in Service is what happens if you die while still in the employment. Your estate would get a lump sum and/or a dependent's pension. If you leave the employment before retirement, often you will get the option to continue these benefits as a life insurance policy which you would pay for yourself. This is known as a continuation option.

Death in Retirement is what happens when you die after retiring. In the case of a Defined Benefit pension scheme, this is typically a dependent's pension payable to your spouse and sometimes children if applicable.

I think you should read over the documents and clarify between the two, in respect of both Employer A and Employer B. They are separate benefits.

 

[J.P.]

Hi DaveVanian – thank you for your comments.

Employer A’s booklet states clearly what the death in retirement benefit is for a member of the scheme & it outlines the level of benefit what a member’s spouse would receive in the event of death in retirement. (i.e. 50% of the member’s annual pension would be payable to their spouse)

What is not clear to me is what happens to this death in retirement benefit on transferring to Employer B under TUPE with the sale of the business ? As the statement of benefit I received recently from Employer B only had the death in retirement benefit relating to the 13 years’ service I had with Employer B outlined . On querying this, Employer B advised that a spouse’s death in retirement benefit is not payable under Employer A’s scheme - Employer A’s booklet states otherwise.

What Employer A’s pension scheme booklet does state under the “Leaving Employment” section is - Death Benefit can be maintained by you under a separate policy on leaving the service of your employer. What concerns me is what is the scope of the term “Death Benefit” as used within this statement ? The term “Death Benefit” is not documented / defined within the section Definitions of Employer A’s pension scheme booklet. So, does it refer to death in service benefit only rather than death in retirement benefit or does apply to all death related benefits ? What it all boils down to for me is - by transferring from Employer A to Employer B under TUPE when the business was sold, did I unbeknown to myself at the time by transferring to Employer B, loose the death in retirement benefit entitlement I had re. 13 years of service under Employer A's scheme ?

 

[MugsGame]

What Employer A’s pension scheme booklet does state under the “Leaving Employment” section is - Death Benefit can be maintained by you under a separate policy on leaving the service of your employer. What concerns me is what is the scope of the term “Death Benefit” as used within this statement ?

I think this almost certainly refers to extending the Death in service benefit after your service, by continuing with a policy you would fund yourself, perhaps at a discount to obtaining fresh life assurance from the open market.

If death in retirement benefit is associated with your DC scheme, there should be no need for a separate policy to continue it, as your notional accumulated share of employer A's DC fund already includes provision for funding the benefit.

But it seems there is no legal onus on employer B to transfer death in retirement benefit. I doubt the clause you are focusing on is relevant in this regard.

 

[J.P.]

Just a quick update - got a response yesterday from Employer B to advise this was an error on their part. The death in retirement benefit accrued under Employer A's defined benefit scheme will be honored. Many thanks to all who contributed !