UK - Firms and employees will be hit by an employment tribunal decision on part-timers' pension rights, lawyers warn.
More than 50,000 part-timers had put their claims – that being denied access to occupational schemes was discriminatory – on hold pending the outcome of the ruling on 27 test cases.
The ruling settled issues such as who is entitled to backdated pensions, where the burden of proof lies and the time period for backdated clams. But lawyers say the verdict fails to give any guidance on how employers should pay the benefits.
And Hammonds Suddards Edge partner Wendy Hunter believes this could leave employees facing massive costs when trying to claim their backdated pensions.
Hunter said: “The judgement may have enabled employers to work out that they did unlawfully discriminate against someone, but how do they remedy that?
“If you allow people access to the scheme going back over a certain amount of years, what happens to the contributions they were supposed to have paid in? Do they have to pay those contributions in with interest as a lump sum to get their benefits?”
Norton Rose partner Lesley Browning said Hunter’s assessment was “absolutely right”, but added that the ruling also left scheme sponsors vulnerable.
She said some companies had already been forced to pay substantial sums and that it could be as much as £20,000 per person.
“Given that most schemes are in deficit, they are going to have to make cash calls on their sponsor to be able to pay for these benefits.”
However, Barnett Waddingham partner Colin Richardson disagreed.
While he conceded that firms would have to pay a lot per person, the total bill will not be as high as feared: “How many part-time employees have stayed with the same employer for 20 years? Hardly any. That’s why these estimates of the costs to British business are overstated.”
Enhanced powers for The Pensions Regulator (TPR) to prosecute and fine company directors who "wilfully or recklessly" put their defined benefit (DB) pension scheme at risk will be hard to enforce, commentators say.
Melrose has pledged to contribute up to £1bn to GKN's pension schemes as part of a final offer to acquire the engineering business.
Existing master trusts will be forced to pay £41,000 when applying for authorisation under the upcoming regime, the government has confirmed.
UPDATE 2 - DWP publishes DB white paper: Stronger powers for TPR, DB chair statements to be introduced
The Pensions Regulator (TPR) will be given the power to fine company bosses who deliberately puts their defined benefit (DB) schemes at risk, the government has confirmed.