If TUPE has a reliable blind spot, it is pensions. Most transfer conversations cover the basics: information, consultation, terms and conditions. The pension question gets noted, passed to someone else or quietly deferred. And that is where things can go properly wrong.
Pension liabilities in a transfer are not just a compliance question. They are a valuation question. Unquantified pension obligations represent real financial exposure that belongs in the deal model, not in a footnote to the HR workstream. Pensions in a TUPE context are genuinely complicated, but complicated is not the same as ignorable. Here are the four myths I hear most often.
"Pension rights don't transfer under TUPE"
Some do. Some do not. That distinction matters, and "it doesn't transfer" is not a free pass to ignore the question.
The general position is that occupational pension rights relating to old age, invalidity and survivors' benefits are excluded from TUPE. But that does not mean pension obligations disappear. The Pensions Act 2004 introduced a separate obligation for transferees to provide a minimum level of pension provision for transferring employees. And beyond the statutory minimum, there may be contractual commitments, written or implied, that do transfer and need to be properly assessed.
The honest answer to "do pension rights transfer?" is: it depends, and you need to find out before completion, not after.
"We just need to offer something broadly comparable"
"Broadly comparable" is a phrase that gets used as though it is a low bar. It is not, and "feels about right" has never been the legal test.
Where a matching obligation applies, comparable provision has to be assessed properly: contribution levels, benefit structures, qualifying conditions. An employer who offers a nominal pension arrangement on the basis that it is "broadly similar" and has not done the analysis is exposed. What feels reasonable across a boardroom table and what holds up under scrutiny are often different things.
"Defined benefit schemes are historic, so not our problem"
They are historic right up until they are not. Employees who have accrued defined benefit entitlements do not leave those behind when they transfer. Past service, ongoing accrual where the scheme is still open, potential redundancy-linked pension enhancements, and other contractual protections can all remain relevant long after the transfer date.
The fact that defined benefit schemes are declining does not reduce the liability. In some cases it concentrates it, because the employees who carry legacy DB entitlements are often the longest-serving and most protected members of the workforce.
"LGPS is too complex, so it won't apply to us"
The Local Government Pension Scheme is complicated. It still applies where it applies. Organisations taking on contracts from local authorities, NHS bodies or other public sector entities frequently encounter LGPS obligations, and the rules around admission bodies, bulk transfers and future accrual are not straightforward.
Complexity is not a defence, and hoping the question goes away is not a strategy. LGPS situations need specialist pension advice at an early stage, not a footnote in the due diligence report.
Why this matters
Pensions are treated as an afterthought in too many TUPE conversations. Partly because they feel like a specialist topic that someone else will handle, and partly because the consequences of getting it wrong are not always immediately visible.
But they are one of the quickest ways to turn what looked like a manageable transfer into a long-term liability. The due diligence that gets skipped at the start has a habit of reappearing later, with interest.
This is not just an HR issue. It is a commercial risk that belongs on the agenda alongside the deal terms, not after them.
If you are working through a transfer and need experienced HR support on the people workstream, including helping scope what the pension questions actually are, I can help.
This article is intended as a general overview and does not constitute legal or pensions advice. Pension obligations in TUPE situations are complex and fact-specific. Specialist employment law and pensions advice should always be sought.