TUPE Transfers And DB Pensions - Court Provides Some Clarification

The recent case of Proctor & Gamble Company v Svenska Cellulosa Aktiebolaget SCA & Other [2012] EWHC 1257 (Ch) involved the court considering how defined benefit obligations are treated following a TUPE transfer in light of the Beckmann and Martin cases. The case very much depended on its facts, but there are points of general application:

The High Court confirmed that if the rules of a pension scheme provide for early retirement to be available subject to the consent of the employer, then the transferred right is the right to be considered for early retirement subject to the consent of the new employer. This is the position that most legal practitioners had assumed, but the judicial confirmation was welcome. The liability that transfers to the new employer is only for any enhancements to early retirement pension that are no longer available to the transferring employee following the TUPE transfer, not for the full amount of the early retirement pension. Therefore, any deferred benefits left in the seller's pension scheme will be deducted from the buyer's liability. The liability for "old...