How to deal with Beckmann liabilities on a business sale
How to deal with Beckmann liabilities on a business sale

The following Pensions practice note provides comprehensive and up to date legal information covering:

  • How to deal with Beckmann liabilities on a business sale
  • What are Beckmann liabilities?
  • Beckmann concerns on a business sale
  • Identifying Beckmann rights on a business sale
  • Identifying Beckmann rights under the seller's scheme
  • Identifying Beckmann rights from previous TUPE transfers
  • Calculating the amount of potential Beckmann liability
  • Ways of dealing with Beckmann liability on a business sale

THIS PRACTICE NOTE APPLIES IN RELATION TO OCCUPATIONAL PENSION SCHEMES

This Practice Note applies to business sales which are subject to the Transfer of Undertakings (Protection of Employment) Regulations 2006, SI 2006/246 (TUPE). For more information on TUPE, see Practice Note: TUPE—an overview for pensions lawyers.

Dealing with Beckmann liabilities on a business sale can be a complex area. Corporate lawyers looking at this should involve a pensions specialist at the earliest opportunity.

What are Beckmann liabilities?

Until the Beckmann and Martin cases, it was generally understood that on a business sale no contractual rights to pension benefits under an occupational pension scheme transferred from a seller to a buyer. This was due to the operation of the pensions exception under TUPE, SI 2006/246, reg 10, which excludes from a TUPE transfer provisions of an occupational pension scheme which relate to:

  1. old age

  2. invalidity (ie ill-health benefits), or

  3. survivors (ie death benefits)

Following the Beckmann and Martin cases, which both concerned transfers from public sector schemes, it became clear that rights under an occupational pension scheme which do not relate to old age, invalidity or survivors benefits, eg rights to early retirement benefits, do transfer under TUPE. These rights, which are known as 'Beckmann rights' or 'Beckmann liabilities', can potentially leave a buyer with a very large future pensions liability in respect of transferring employees.

The Beckmann and Martin cases

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