Pensions and the employment contract
Produced in partnership with Wyn Derbyshire of gunnercooke LLP

The following Pensions practice note produced in partnership with Wyn Derbyshire of gunnercooke LLP provides comprehensive and up to date legal information covering:

  • Pensions and the employment contract
  • Dual nature of accrued pension rights under trust and contract law
  • Express or implied contractual rights
  • Express contractual terms
  • Implied contractual terms
  • Variation of pension rights
  • Determining whether a pension right needs to be varied
  • Impact of duality of pension rights
  • Can pension scheme rights be amended by contractual variation?
  • Varying a pension right from a pensions or trust law perspective
  • More...

Pensions and the employment contract

Employer-sponsored pension schemes are essentially tax-advantaged savings vehicles whereby employers can make provision for the financial needs of employees and their dependants in later life. Unsurprisingly, the employer-employee relationship, as dictated by the employment contract and general law, plays an important role in pension scheme governance. The key aspects of that role are relevant to occupational pension schemes, but many of the points made will also apply to situations where pension provision is made by means of personal pension schemes to which the employer contributes.

Dual nature of accrued pension rights under trust and contract law

Accrued pension rights under an occupational pension scheme can typically be categorised as:

  1. pension rights of scheme members (trust beneficiaries) arising under the trusts of the scheme, and

  2. pension rights arising as contractual terms of the employment relationship between an employer and employee

Members’ rights under the pension scheme trust are in principle enforceable against the scheme’s trustees through the courts in the same way as for a beneficiary under any trust. Indeed, in some respects, a pension scheme beneficiary is in a more fortunate position than a 'normal' beneficiary in this regard as pensions law generally provides for:

  1. access to an independent dispute resolution procedure under the scheme—for further information, see Practice Note: Internal dispute resolution procedure—what is involved?, and

  2. in certain circumstances, the ability to

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