Back To Basics: Do Employers Have A Duty To Inform Employees About Pension Benefits?

Pension schemes can often appear difficult to understand for many employees; a reflection, perhaps, of a more widespread lack of engagement with financial savings and planning. The question then frequently arises: how far does an employer's duty to inform employees about pension benefits extend?

In the next of our back to basics series, Gowling WLG's Combined Human Resources Solutions (CHRS) team explain the extent of an employer's duties to inform its workforce about the pension benefits they're entitled to.

What does the law say about an employer's duty to inform employees about their pension benefits?

There have been surprisingly few case law decisions in relation to employer duties to inform employees about their pension benefits. Surprising, because it might be easy to assume that there is at least some duty to tell employees about what pension benefits they are entitled to, to ensure they make the most of their benefit entitlement.

But in fact, most decisions have made it clear that there is almost no legal duty on an employer to inform its employees about pension benefits or indeed other financial matters. There is also no implied contractual duty on employers to ensure details of the company pension scheme are given to employees.

This is not to be confused with the employer's duty to tell employees about pensions more generally. There are statutory obligations under the Pensions Act 2008 to provide employees with information about automatic-enrolment, and the workplace pension scheme the employer uses.

However, what we are considering here is whether that employer's duty extends to telling employees about any contractual rights, benefits or entitlements, as well as the potential financial implications of making one particular choice in relation to their pension benefits over another.

Is there any obligation on an employer to inform of pension benefits at all?

Yes, but the courts have found that this duty arises in very fact-specific circumstances. In Scally v Southern Health and Social Services Board [1991], the House of Lords confirmed there is an implied duty on an employer to inform an employee about an employee's contractual rights to pension benefits. But this is a limited duty and will only arise in very specific circumstances where:

the employment contract results from negotiation with a union or other representative body; the particular contractual term must offer the employee a valuable benefit which is dependent on action...