EARLY RETIREMENT RIGHTS UNDER OCCUPATIONAL PENSION SCHEMES DO TRANSFER UNDER TUPE
28 May 2012
A high court has ruled that the buyer of a business will be liable for certain early retirement pension rights under the original owner's occupational pension scheme if the transfer takes place under the Transfer of Undertakings (Protection of Employment) (TUPE) Regulations.
Out-Law reports:
Benefits for "old age, invalidity or survivors" will generally not transfer under TUPE, which protects the rights of employees if the company they work for is taken over by a new owner or the work that they provide is outsourced or brought back in house. However, the court held that only benefits due after the normal retirement date were classed as 'old age benefits', meaning that responsibility for any benefits due between an early retirement date and the normal retirement date of a pension scheme member transferred to the new employer. In his judgment , Mr Justice Hildyard followed the reasoning of the European Court of Justice (ECJ) in two earlier public sector cases, known as 'Beckmann' and 'Martin'. As the early retirement portion of the pension was not a benefit for "old age", it did not fall within the exemption and therefore responsibility to fulfil it transferred to Swedish company Svenska Cellulosa Aktiebolaget (SCA) when it purchased the European tissue business belonging to Proctor and Gamble (P&G) in 2007.
Read the full story from Out-Law
HMRC WINS APPEAL CASE ON NATIONAL INSURANCE PAYMENTS INTO FURBS
12 June 2012
The Court of Appeal has ruled that National Insurance contributions are due on pre-6 April 2006 employer payments into Funded Unapproved Retirement Benefit Schemes (FURBS).
IFA Online reports:
In Forde and McHugh (FML) v the Commissioners of HM Revenue & Customs (HMRC) , HMRC imposed an employer NI contribution liability on £163,000 paid into a FURBS during the 2002/03 tax year, only to lose on FML's appeal to the Upper Tribunal. But the Upper Tribunal's decision has now been reversed with one judge stating five reasons as to why these contributions constituted earnings paid to or for the benefit of McHugh and were therefore subject to NI. Consultant LCP said HMRC would be pleased with this result. "It now appears that they could otherwise have been exposed to repayment claims of up to £8.5m arising from contributions to unapproved retirement benefit schemes. But given the amount riding on this, it will be interesting to see whether it now goes to the Supreme Court," it commented. FURBS were introduced to provide benefits for pension scheme members with earnings above the pre-existing salary cap. A-Day, 6 April 2006, introduced a lifetime allowance to pension saving, replacing the salary cap. The use of FURBS consequently significantly decreased
CIPP Policy News Journal
12/04/2013, Page 47 of 362
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