UK - Tougher rules on pension transfers could lead to parts of businesses being closed down and workers made redundant, employers warn.
And the Engineering Employers’ Federation is urging the government to ignore amendments to the Pensions Bill which have been tabled by one of its own peers, Baroness Turner of Camden.
The EEF has also written to several peers asking them to oppose the amendments that have been tabled under TUPE (Transfer of Undertakings Regulations) provisions.
Turner’s proposals would require an employer accepting a transferred worker (transferee) to pay pensions of a similar value to the benefits that were being provided by the existing firm, the transferor.
Under current government proposals, the employer accep-ting the worker must provide either:
Membership to an occupational salary-related scheme, that meets certain requirements, or
Membership to a defined contribution scheme or stakeholder pension with matched employee and employer contributions up to 6%.
The EEF argues amending the rules could “artificially limit” the number of transfers taking place, particularly if they involved management buyouts or small employers.
EEF deputy director of employment policy David Yeandle said: “This could result in decisions to close parts of businesses that would otherwise have been transferred with the employees concerned being made redundant.
“If some degree of pension protection was introduced by the government, the transferee should have the flexibility to be able to offer transferring employees either a DB or DC scheme irrespective of the type of scheme provided by the transferee.
Pensions minister Malcolm Wicks conceded that obliging transferee employers to provide schemes comparable to existing ones might lead to employers pulling out of provision altogether.
But he told MPs: “No longer will employees who have access to an occupational scheme with employer contributions risk losing their benefit when a transfer occurs. Our Bill will ensure a decent level of pension provision by their new employer.”
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