The well known 2002 ECJ decision in Beckmann1 clarified how the "pensions exception" in TUPE was intended to work: broadly these "Beckmann rights" are rights to an enhanced redundancy pension on early retirement which pass to a purchaser under a TUPE transfer.
However a recent determination by the UK Pensions Ombudsman2 has ruled that a subsequent amendment leading to a benefit reduction was valid even though the rule change followed a transfer of employment that was subject to TUPE.
Facts
The member was TUPE- transferred from ICI to Union Carbide Limited ("UCL") in 1995, and took a transfer of his accrued pension rights to the UCL Scheme.
UCL together with the UCL Scheme was acquired by Dow Chemical Company Limited ("Dow") in 2001. In 2003 pension benefits were harmonised across Dow including a provision whereby pension paid on redundancy between the ages of 50 and 57, which had previously been unreduced, should now be actuarially reduced for early payment.
When the member was made redundant in 2009 at an age between 50 and 57, he objected to the reduction of the whole of his pension stating that his pension on redundancy should not have been reduced in respect of his pre-2003 pensionable service and that this right was protected by TUPE.
Determination by the Ombudsman
On the transfer of his employment, TUPE gave the member only the same protection under the UCL Scheme as he had under the ICI Scheme. The Ombudsman ruled therefore that this did not preclude later amendments to scheme rules, including those in 2003 to remove the right to an unreduced pension on redundancy, so long as these were allowed under UK legislation and the scheme rules (e.g. trustee consent provided). On the facts of the case, the Ombudsman found that the amendment had been validly made; in particular that the member's accrued pension rights had not been prejudiced. He did not have an entitlement to an unreduced pension in 2003 as he did not meet the redundancy criterion at that time.
Maladministration - a token gesture?
The member was however successful in arguing maladministration in terms of how the changes to the redundancy process were communicated but as he had not suffered a financial loss as a result, he was only awarded £50 for inconvenience and distress suffered.
Comment
Ombudsman's determinations are binding only on the parties involved in the complaint and do not have general legal effect. However, the determination is interesting in that it suggests that Beckmann rights can be removed by a subsequent rule amendments providing the conditions mentioned by the Ombudsman (that the amendment must be valid under the scheme rules and UK legislation) are satisfied.
Footnotes
1. [2002] IRLR 578
2. Duffy - 80802/1
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