Auto-Enrolment During Business Changes
How do mergers, acquisitions, and business restructures affect workplace pensions? Understand auto-enrolment during business changes.
Last updated: 30 January 2025
Business changes have implications for workplace pension duties.
Types of Business Change
Common Scenarios
| Change | Detail |
|---|---|
| Merger | Two become one |
| Acquisition | One buys another |
| Demerger | One becomes two |
| Restructure | Internal changes |
| Closure | Business ends |
Pension Implications
| Each | Has |
|---|---|
| Different | Effects |
| On employer | Duties |
| On workers | Rights |
| Check specifics | Important |
TUPE Transfers
What TUPE Does
| Effect | Detail |
|---|---|
| Transfers | Employment |
| Preserves | Terms |
| New employer | Takes over |
| Continuous | Employment |
Pension Position
| General Rule | Detail |
|---|---|
| Pension rights | Not fully transferred |
| But occupational schemes | Have special rules |
| Auto-enrolment | Duties transfer |
| New employer | Has duties |
Auto-Enrolment Under TUPE
New Employer Duties
| Takes Over | Detail |
|---|---|
| Auto-enrolment | Responsibilities |
| For transferred | Workers |
| Must assess | Them |
| Must enrol | If eligible |
Scheme May Change
| Position | Detail |
|---|---|
| Old scheme | May not continue |
| New scheme | Offered |
| Must meet | Minimum requirements |
| Comparable | Required for some |
Mergers and Acquisitions
Workforce Integration
| Task | Detail |
|---|---|
| Assess all | Workers |
| Determine | Scheme arrangements |
| Harmonise | If appropriate |
| Communicate | Changes |
Scheme Harmonisation
| Often | Employers |
|---|---|
| Want one scheme | For all |
| Transition | Workers |
| Over time | Or immediately |
| Consider | Legal requirements |
New Employer Duties
Taking Over Workers
| Must | Do |
|---|---|
| Assess workers | On transfer |
| Provide scheme | Qualifying |
| Enrol eligible | As required |
| Contribute | Minimum 3% |
First Pay Period
| From | Transfer Date |
|---|---|
| Assess | Each period |
| Normal rules | Apply |
| As if | New employee |
| But employment | Continuous |
Workers' Existing Pots
Previous Scheme
| Position | Detail |
|---|---|
| Pot remains | In old scheme |
| Worker's money | Still theirs |
| Deferred member | Usually |
| Can transfer | If wanted |
Transfer Options
| Worker Can | Detail |
|---|---|
| Leave pot | In old scheme |
| Transfer to | New scheme |
| Transfer to | Personal pension |
| Their choice | Usually |
Business Closure
When Business Ends
| Position | Detail |
|---|---|
| Employment ends | Termination |
| Pension membership | Becomes deferred |
| No more | Contributions |
| Pot remains | Invested |
Worker Position
| Status | Detail |
|---|---|
| Deferred member | Of scheme |
| Pot safe | In scheme |
| Can transfer | When ready |
| Access at | Pension age |
Restructuring
Internal Changes
| If | Restructure |
|---|---|
| Same employer | Duties unchanged |
| Same workers | Same rights |
| May change | Scheme arrangements |
| Consultation | May be needed |
Changing Schemes
| If Employer | Changes Scheme |
|---|---|
| New scheme | Must qualify |
| Workers moved | To new scheme |
| Old pots | May stay or transfer |
| Communication | Essential |
Multiple Employers
Post-Merger
| If | Multiple Entities |
|---|---|
| Each employer | Own duties |
| Workers may be | With different |
| Assess | Per employer |
| Clear structure | Needed |
Communication
To Workers
| Must | Inform |
|---|---|
| About changes | To arrangements |
| New scheme | Details |
| Their options | Clearly |
| Timeline | For changes |
Timing
| When | Communicate |
|---|---|
| Before change | Where possible |
| At transfer | Confirmation |
| After | New arrangements |
Practical Steps
For Acquiring Employer
| Step | Action |
|---|---|
| 1 | Identify transferring workers |
| 2 | Assess their status |
| 3 | Set up/extend scheme |
| 4 | Enrol as required |
| 5 | Communicate |
Due Diligence
| Before Acquisition | Check |
|---|---|
| Pension arrangements | Current |
| Auto-enrolment compliance | Historic |
| Any liabilities | Outstanding |
| Costs | Of continuing |
TPR Notification
Changes to Report
| Notify TPR | If |
|---|---|
| New employer | Takes over |
| Business changes | Significantly |
| Contact details | Change |
| Through | Online portal |
Re-Declaration
| May Need | New Declaration |
|---|---|
| If duties date | Changes |
| New employer | Has own |
| Check requirements | With TPR |
Record Keeping
Transfer Records
| Keep | Detail |
|---|---|
| Transfer date | When happened |
| Workers transferred | Who |
| Previous arrangements | What was |
| New arrangements | What is |
Compliance Evidence
| Document | Detail |
|---|---|
| Assessments | For all workers |
| Enrolments | When done |
| Communications | Copies |
| Contributions | Records |
Insolvency
If Business Insolvent
| Position | Detail |
|---|---|
| Pension pot | Protected |
| Trust structure | Separate from business |
| Members | Not creditors issue |
| Pot safe | In scheme |
Outstanding Contributions
| If Unpaid | Contributions |
|---|---|
| May be lost | To members |
| PPF | May cover some DB |
| DC schemes | Members may lose |
| Priority | In insolvency |
Summary
Key Points
| Element | Detail |
|---|---|
| Duties transfer | Under TUPE |
| Pots protected | Worker's money |
| New employer | Takes over duties |
| Communication | Essential |
For Employers
| Task | Action |
|---|---|
| Understand | Obligations |
| Plan transition | Carefully |
| Communicate | To workers |
| Comply | With duties |
Related answers
Auto-Enrolment Overview
What is workplace pension auto-enrolment? Understand the UK's automatic enrolment system and employer duties for pension contributions.
Leaving Your Employer's Pension Scheme
What happens to your pension when you leave a job? Understand your options for workplace pension pots after employment ends.
Pension Transfers
Can you transfer workplace pensions? Understand how to consolidate pension pots and transfer between schemes.
Frequently Asked Questions
- What happens to auto-enrolment duties when a business is sold?
- When a business transfers under TUPE, the new employer inherits pension duties for transferred workers. The new employer may need to provide comparable pension arrangements. Different rules apply depending on the type of pension scheme involved.
- Do workers keep their pension when a company merges?
- Workers' existing pension pots remain theirs regardless of business changes. The question is which employer has ongoing duties. Under TUPE transfers, the new employer takes over auto-enrolment responsibilities for transferred employees.
- What happens to pensions if a business closes?
- If a business ceases trading, workers become deferred members of their pension scheme. Their pots remain invested. No further contributions are made. Workers can transfer pots to new employer schemes or personal pensions.