Business transfers – do early retirement benefits transfer?


On a business transfer, the Transfer of Undertakings (Protection of Employment) Regulations 1981 (“TUPE”) usually apply so that rights and obligations under employment contracts, an employment relationship or a collective agreement are transferred automatically from a seller to a buyer. The buyer is therefore obliged to replicate benefits going forward. But the legislation contains an important exception for rights under occupational pension schemes that relate to old age, survivors’ and invalidity benefits, which means that these rights do not transfer. However, following the European Court of Justice’s decision of 6 November 2003 in Martin and others v South Bank University, there is a real risk that benefits payable on early retirement do transfer (even though normal retirement, dependants’ and ill-health benefits generally do not).

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