Know your legal obligations on pensions

You now have a duty to inform and consult your employees about significant changes in any occupational pension scheme you offer, or personal pension schemes you contribute to, by a direct payment arrangement on behalf of your staff.

Occupational pension schemes

For occupational schemes, you need to inform and consult on changes about:

• increasing the pension age
• closing the scheme to new members
• closing the scheme to existing members
• removing liability for employer contributions
• introducing member contributions
• reducing employer contributions to defined contribution schemes
• changing to money-purchase benefits
• changing the method of determining the rate of future accrual

Personal pension schemes

For personal pension schemes, you need to inform and consult on changes about:

• ceasing employer contributions
• reducing employer contributions
• increasing employee contributions

You have to provide information to affected members and/or their representatives in writing before the changes occur. You must describe the changes and their effect on members, accompany it with relevant background information and indicate the timescale. At least 60 days of consultation must be allowed before the decision to make the change is made. Consultation must be conducted with a view to cooperation.

There are some exceptions to the consulting requirement. It does not apply to:

• employers with less than 50 employees
• public service schemes
• small occupational schemes with less than 12 members who are all trustees of the scheme
• occupational schemes with less than two members
• schemes not registered with HM Revenue & Customs

If you are consulting with employee representatives, you must give them paid time to undertake their duties and must not subject them to dismissal or any other detriment due to their need for such time - otherwise, they can take you to an industrial tribunal.

See how to inform and consult your employees.