Voluntary resignations to avoid paying full benefits

ghostgirl_2

zzzLazyDaisy wrote: »

The company is not acting unlawfully - on the contrary, what they are doing is quite common.

Put simply.... the company has made an offer to its employees that they can leave on certain terms, if they so wish. If the terms are not acceptable, then the employees are not under any obligation to accept them, and they just carry on working for the company.

Whether these proposals breach the employees rights regarding early retirement depends on the rules of the pension scheme. No-one on here can advise you of that, you'd need to get a copy of the rules and go through them with a fine tooth comb, but it isn't very likely.

Is there a recognised trade union?

Thanks Daisy

I have a copy of the Trust deed and Rules, which I've been combing through, and it would seem that the Company/trustees have made certain Amendments in recent years, without informing us.

For example the Deferred Member section used to require Company Consent to draw early retirement pension, now, in the 2008 Deed of Amendment, it does not.

Similarly with the Employer Initiated Early Retirement" section, it's the opposite situation there, it DIDN'T used to require Company Consent, and now it does.

By becoming Deferred Member first (albeit for only a short time)he volunteers are being allowed to take their pensions at 50, contrary to new government regulations of 55, and according to the inland revenue website the only reason they can bypass the 55 regulation is because they now have an "unqualified right" (i.e. no company consent requirements). But as I say, the Deferred Membership section on early retirement DID require company consent in our past Pension Booklets, and, I assume, in the Rules as well.

Can the Company/Trustees even make changes the Rules on company Consent without informing us?

zzzLazyDaisy

ghostgirl wrote: »

Can the Company/Trustees even make changes the Rules on company Consent without informing us?

If you are asking whether the Trustees can manage the scheme, and make changes to the rules without informing the individual members - the answer is 'probably'. The Trustees have a duty to act in the best interests of the beneficiaries of the scheme (but note the best interests of the majority may be in conflict with the best interests of a small minority who wish to leave early on enhanced terms).

You can find out more info about Trustees' duties and responsibilities here

http://www.thepensionsregulator.gov.uk/guidance/guidance-for-trustees.aspx

ghostgirl_2

zzzLazyDaisy wrote: »

If you are asking whether the Trustees can manage the scheme, and make changes to the rules without informing the individual members - the answer is 'probably'. The Trustees have a duty to act in the best interests of the beneficiaries of the scheme (but note the best interests of the majority may be in conflict with the best interests of a small minority who wish to leave early on enhanced terms).

You can find out more info about Trustees' duties and responsibilities here

Yes, I can see that that makes sense.

However myself and the members of my Company are in a "Special Section" of the fund, we transferred under TUPE in 1997, and our Benefit entitlements have always been better than they are in the Main Section of the Fund. For example, in the Main Section unreduced pensions without company consent for those who are subject to an "Employer Initiated" redundancy scenario, whereas in the Special Section this has always been so (until the recent changes that is).

zzzLazyDaisy

In 1997 Pensions were expressly excluded from TUPE. There were some changes to this position in 2006, and further changes in Feb this year but these later changes only affect transfers taking effect after those dates.

But even if there was an express agreement between the outgoing employer and the incoming employer that TUPE would be deemed to apply to the pension scheme in your case - TUPE only protects employees from changes to their contract for a reason relating to the transfer. It is now 15 years later, and any changes are unlikely to have been made for a reason relating to a transfer 15 years ago, but for other reasons.

If you are concerned about mismanagement or unlawful practice, you can make a complaint to the regulator

http://www.thepensionsregulator.gov.uk/about-us/how-to-make-a-complaint.aspx

But I suspect that it is simply the case that time has moved on, all pensions schemes are feeling the squeeze, and hard decisions have to be made by the Trustees.

ghostgirl_2

Thanks to everyone who's offered me their time and thoughts in this thread
As a newbie to the forum it's great to be made to feel so comfortable and welcome.
Kindest Regards to you all
Ghostie

hyubh

ghostgirl wrote: »

However people CAN access their pension without company consent AFTER they become Deferred Members. However this is on a "cost neutral" (to the fund) basis.

What you've described sounds similar to the LGPS - if an early retirement happens without the employer's or ex-employer's consent (e.g. after becoming a deferred member), then the member takes the hit through a reduced pension; if an early retirement happens through redundancy however, then the employer takes the hit with a one-off 'strain charge' to the fund. In either case the result is 'cost neutral' to the pension fund.

Sorry, that's hardly helpful, but if the situation is indeed similar, I can see where your employer is coming from. Early retirement rules can have the effect of doubling redundancy payments, only with half of it 'hidden' from the person benefiting.

ghostgirl_2

hyubh wrote: »

What you've described sounds similar to the LGPS - if an early retirement happens without the employer's or ex-employer's consent (e.g. after becoming a deferred member), then the member takes the hit through a reduced pension; if an early retirement happens through redundancy however, then the employer takes the hit with a one-off 'strain charge' to the fund. In either case the result is 'cost neutral' to the pension fund.

Sorry, that's hardly helpful, but if the situation is indeed similar, I can see where your employer is coming from. Early retirement rules can have the effect of doubling redundancy payments, only with half of it 'hidden' from the person benefiting.

Yes that about sums it up in a nutshell, it's probably legal, but it's also bordering on sneaky because most of those who are volunteering to go are pretty much in the dark as regards what they'd be entitled to if no one volunteered and the Company was forced to come up with another offer. I.e. Voluntary Redundancy - which according to our Rules would be far less of a pension reduction.

I'm not one of those who will be resigning as I'm under 50, but it remains to be seen what will happen next and whether the company's plan for the next year or two is to sell us off or even close us down.

N1AK

ghostgirl wrote: »

but it's also bordering on sneaky because most of those who are volunteering to go are pretty much in the dark as regards what they'd be entitled to if no one volunteered and the Company was forced to come up with another offer. I.e. Voluntary Redundancy - which according to our Rules would be far less of a pension reduction.

Surely it can't be that hard to explain to them given that you're only talking about a small group of people? It may be a little 'sneaky' but it's your colleagues responsibility to consider what is being offered and decide. If they can't be bothered to do that properly then I have limited sympathy!

taktikback

Agree with N1AK - find out what's actually being offered, and then decide if it's to your advantage. If not, don't take it. From what's been said, it looks like a voluntary redundancy package with no particular impact on your pension -i.e what you would have got anyway if you left and became a deferred member.

Debt_Free_Chick

ghostgirl wrote: »

The Company recently asked for voluntary resignations, in order to reduce the workforce by 30 to 40 employees, offering a financial incentive as a sweetener.

Those who accept the package, and who are old enough to access their pensions (which 90% of them are) are able to do so, but subject to much larger reductions than would have been the case were the "voluntary Leaver Incentive Scheme" to have been categorised as "Employee Initiated Early Retirement".

Sounds like the Company has "packaged" these things together so you get the financial incentive but at the expense of the less generous pension terms. As the company has to consent to early retirement (now) then that would be allowable.

You should have been informed of the change in the rules, but if the pension scheme issues an annual newsletter, the change was probably announced in there (worth checking?)

Similarly with the Employer Initiated Early Retirement" section, it's the opposite situation there, it DIDN'T used to require Company Consent, and now it does.

But as this is voluntary, you wouldn't have qualified for the EIER as set out under the old rules, either - so a comparison with that option is probably not appropriate.

HTH