WO toolkit 2012 complete.pdf - GMB
WO toolkit 2012 complete.pdf - GMB
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.