My employer wants to change our pension scheme. What are our rights?

Retrospective changes

There is a law that prevents pension schemes from making retrospective changes that would cut benefits or rights that you have already built up without the agreement of each scheme member who is affected. The basic test is whether someone who has just left the scheme would have had their benefits affected for the worse if the proposed change had applied. This can include losing guaranteed future increases, as the guarantee was made in the past.

The scheme actuary has to provide a certificate saying the change is not detrimental, or the scheme trustees must get the permission of everyone identified by the actuary as losing out. This protection only applies to benefits already built up, not future ones. So a scheme cannot easily decide that past service would be covered by a lower accrual rate, but can change the accrual rate for future service (as long as they act within the scheme rules.)

Other changes

How other changes are made will depend on the rules of your scheme set out in something called the scheme trust deeds. Generally, the employer and/or the trustees have wide powers to make changes to future benefits. Sometimes trust deeds will provide extra protection. Members may have to be given advance notice or even have to vote on changes. Companies have come unstuck in the past because they have not checked their trust deeds, so it is always worth looking at them and getting advice if major changes are planned that will hit staff.

But the employer can always simply wind up the scheme, so it may be better to accept unpopular changes than risk the scheme closing. If changes are made to a scheme, you should be told about them within three months of the date of the change, unless they are changes in the benefits that are paid, in which case you must be informed within a month. Similar rules about consultation and consent apply to changes to occupational 'money purchase' schemes.

Employers with at least 50 employees in Great Britain also have a statutory duty to inform and consult when members of a workplace pension scheme are affected by changes in their pension provisions. Employers must provide written information and consult both active and prospective members and union or employee representatives (unless the change is to comply with statutory provision or a Pensions Regulator determination) with a statutory period of 60 days. The Pensions Regulator (PDF) provides more information on this.

Note: This content is provided as general background information and should not be taken as legal advice or financial advice for your particular situation. Make sure to get individual advice on your case from your union, a source on our free help page or an independent financial advisor before taking any action.