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WO toolkit 2012 complete.pdf - GMB

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SECTION 8<br />

CONSULTATION ON CHANGES TO PENSION SCHEMES<br />

Since 6th April 2006,a statutory obligation has existed for employers to consult with employees on<br />

changes to a pension scheme.<br />

The obligation applies to employers of more than 50 employees who provide an occupational pension<br />

scheme(excluding public sector pension schemes).<br />

CHANGES<br />

Changes which must be consulted on include:<br />

• Increases to normal pension age<br />

• Closing a pension scheme to some,or all,new joiners<br />

• Closing a defined benefit scheme to future accrual for some,or all,members<br />

• Removing the liability to make employer contributions to a defined benefit scheme(meaning that<br />

employers are not obliged by the rules of a pension scheme to contribute to the scheme)<br />

• Changing the accrual rate for some,or all,members of a defined benefit pension scheme<br />

• Changing method of accrual in a defined benefit scheme for some or all members(e.g.by moving<br />

from final salary to CARE)<br />

• Reducing the level of employer contribution for some,or all,members of a defined contribution<br />

scheme or personal pension plan<br />

EXCEPTIONS<br />

Consultation is not required where these changes are made to comply with a statutory provision or a<br />

determination by the Pensions Regulator; or if the change will have no lasting effect on the rights of<br />

employees to join the scheme or benefits provided.<br />

It is also important to note that change can only be made to employees’future pension rights(i.e.the<br />

pension they build up through future service). Any changes to the rights a member has built up can<br />

only be made with the express agreement of that individual member.<br />

CONSULTATION PROCESS<br />

The consultation on these changes must be carried out for a period of not less than 60 days before any<br />

change can be affected. All active members and prospective members must be consulted as must<br />

representatives of recognised Trade Unions.<br />

Written information on proposed changes should be provided to these people before the consultation<br />

begins. This information should include:<br />

• Details of changes and the likely effect on members<br />

• Relevant background information<br />

• Timescales involved before proposals are implemented<br />

In the course of the consultation both employer and those being consulted are under a duty to“work in<br />

a spirit of co-operation”. There is no legal requirement that agreement must be reached.<br />

At the start of a consultation,parties should be notified of a deadline for submission of comments. At<br />

the end of a consultation period,an employer is obliged to consider responses received before making<br />

a final decision to implement the initial proposal.<br />

ENFORCEMENT<br />

The details of the consultation obligation are laid out in full in the Occupational and Personal Pension<br />

Schemes(Consultation by Employers and Miscellaneous Amendment)Regulations 2006(SI 2006/349).<br />

Any parties failing to comply with these obligations can be reported to the Pensions Regulator,who has<br />

the power to investigate and impose civil penalties,but does not have the power to overturn the<br />

relevant changes in such circumstances.

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