Q&As

Can an employer settle pension claims using a settlement agreement?

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Published on LexisPSL on 17/10/2014

The following Employment Q&A provides comprehensive and up to date legal information covering:

  • Can an employer settle pension claims using a settlement agreement?
  • Occupational schemes: not possible to waive accrued rights unless existing dispute/doubt regarding rights or entitlements
  • Personal pension schemes or group personal pension schemes: possible to waive accrued rights
  • Personal pension schemes or group personal pension schemes: waiving future claims
  • Auto-enrolment pension rights

Can an employer settle pension claims using a settlement agreement?

The answer to this will depend on :

  1. the type of pension scheme in issue

  2. whether an issue relating to pension has specifically been raised and/or there is some issue in dispute or whether the employer is just trying to cover all eventualities in the settlement agreement

The employer will also need to be clear about what claims the employer wishes to settle and against whom those claims would be brought. These issues are considered below.

Further information is also available in our precedent Settlement agreement and its associated drafting notes.

Occupational schemes: not possible to waive accrued rights unless existing dispute/doubt regarding rights or entitlements

An occupational scheme is one set up by the employer for the benefit of the employees. This contrasts with a scheme run by a third party to which the employer and the employee contribute for the employee's benefit, usually referred to as a personal pension scheme or a group personal pension scheme.

Most public sector schemes occupational schemes are statutory and are governed by the Superannuation Act 1972 and subsequent regulations. Private sector schemes, however, tend to be set up and run as trusts under trust deeds and scheme rules.

For further information, see our

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