My employer wants to change our pension scheme. What are our rights?

Different kinds of changes to salary related schemes are governed by different rules.

Retrospective changes

There is a rule that prevents pension schemes from making retrospective changes that would cut benefits or rights that you have already built up without the agreement of scheme members who are affected.

The basic test is whether someone who had just left the scheme would have had their benefits affected for the worse if the proposed change had applied. This can include losing guaranteed future increases, as the guarantee was made in the past.

The scheme actuary has to provide a certificate saying the change is not detrimental, or the scheme trustees must get the permission of everyone identified by the actuary as losing out.

This protection only applies to benefits already built up, not future ones. So a scheme cannot easily decide that past service would be covered by a lower accrual rate, but can change the accrual rate for future service (as long as they act within the scheme rules.)

Other changes

How other changes are made will depend on the rules of your scheme set out in something called the scheme trust deeds. Many give the trustees and/or the employer wide powers to make changes. Rules may require the trustees to get actuarial advice on whether improved benefits are affordable.

Sometimes trust deeds will provide extra protection. Members may have to be given advance notice, or even have to vote on changes. Companies have come unstuck because they have not checked their trust deeds, so it is always worth looking at them and getting advice if major changes are planned that will hit staff.

But the employer can always simply wind up the scheme, so it may be better to accept unpopular changes than risk the scheme closing.

If changes are made to a scheme you should be told about them within three months of the date of the change, unless they are changes in the benefits that are paid. This must be done within a month.

See the OPAS website for information about scheme changes and disclosure.

Money purchase schemes

As these are much simpler, there is much less that can be changed.  Occupational schemes will still have their own rules which must be followed and again you should be told within three months of any changes, unless it is a change in charges in which case the time limit is a month.