TUPE or not TUPE? How Auto-Enrolment could affect your obligations on transfer

Since the start of pensions auto-enrolment (AE), a number of questions have arisen on the interaction of employers’ AE obligations under the Pensions Act 2008 with the “TUPE” pension protection provisions of the Pensions Act 2004.

TUPE Requirements

The effect of the TUPE provisions is to protect the pension entitlements of employees moving from a ‘transferring employer’ to a ‘receiving employer’ as part of a TUPE transfer. Under these rules, a receiving employer has to offer transferring employees, were members of or who had been entitled to join an occupational pension scheme before the transfer, a scheme which meets certain criteria.

This applies where the transferring employer’s scheme was either a defined benefit scheme or a money purchase scheme where the transferring employer had been required to make contributions. The receiving employer can choose how to meet its obligations to the transferring employees. If it chooses to offer membership of a money purchase scheme, then it has to match employees’ contributions up to 6%.

Auto enrolment obligations

Meanwhile under the AE obligations, employers are now obliged to automatically enrol ‘eligible jobholders’ into a ‘qualifying’ scheme from the date that jobholder becomes eligible for auto-enrolment. This applies unless the employee is already a member of a pension scheme which can be deemed a ‘qualifying scheme’ under the AE legislation. A ‘jobholder’ is an individual who is ordinarily working in Great Britain under a contract, aged between 16 and 75 and paid ‘qualifying earnings’ which, for the 2013/14 tax year, has been set at between £5,668 and £41,450. There is a six year phasing period for contributions. For the period between July 2012 and September 2017 the minimum is 1% for employers (leading to a total minimum contribution including employee contributions of 2%).

The interaction?

A particular issue that has arisen has been the disparity between the contributions required by employers under TUPE and AE. The phasing period for AE does not fit with TUPE provisions. This means, for example, that where a TUPE transfer occurs, the receiving employer would be required to match contributions of up to 6% when, under AE, the same employees may be entitled to as little as 1%, had they still been in employment with the transferring employer.

This disparity is to be addressed by new regulations (the draft 2013 Regulations), which instead make it possible for employers to choose to pay contributions that are either:

  • Not less than those paid by the transferring employer (in respect of the same employee) immediately before the transfer.
  • Match employee contributions up to a maximum of 6%.

This is good news for receiving employers and could make a significant difference to the pensions liabilities associated with incoming employees on TUPE transfers. The draft 2013 Regulations were due to come into force in Autumn 2013 but enactment has now been delayed until April 2014.

A further issue arising under TUPE transfers and AE interaction is the difference in staging dates between the transferring and receiving employer. For example, where the transferring employer has passed its staging date but the receiving employer has not, the question arises whether the receiving employer has to comply with its AE obligations sooner for those transferred employees, or whether it can wait for its original staging date and assess the transferring employees for AE along with its existing employees.

In this situation, it appears that the receiving employers staging date still stands and transferring employees who are not enrolled into a ‘qualifying scheme’ would be assessed for AE at the receiving employers staging date.  However, eligible employees that were enrolled into a qualifying scheme with the transferring employer would need to be auto-enrolled into a qualifying scheme on transfer by the receiving employer. It is therefore important that receiving employers are aware of the transferring employer’s staging date in case they need to meet AE obligations for some transferring employees before their own.   


The relationship between TUPE and AE obligations continues to give rise to uncertainty. Hopefully, when the draft 2013 Regulations are enacted and there is further Pensions Regulator guidance regarding staging dates, the picture for employers will become clearer.


This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.