Pensions

This Overview outlines the Practice Note material available in our Pensions subtopic.

Pensions—general considerations for employment lawyers

Payment into pension schemes that are registered with Her Majesty's Revenue and Customs (HMRC) has significant tax advantages for both employers and employees (see: ‘The pensions tax regime’ below). Pension schemes are also a way of attracting and retaining employees.

Under European law pension benefits are considered to be deferred pay, so they are subject to the principle of 'equal pay for equal work'. A significant amount of indirect discrimination litigation has occurred in the past few years; the majority of which had been brought by part-time workers, the majority of whom are women.

Employers may run occupational pension schemes for the benefit of their employees. Occupational pension schemes tend to be either 'final salary' (also known as 'defined benefit') schemes or 'money purchase' (also known as 'defined contribution') schemes:

  1. final salary schemes commit the scheme, under the deed and rules, to paying members a set annuity on retirement

  2. money purchase schemes require employees and employers to pay a set amount each year into the scheme, usually expressed as a percentage of

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Right to work guidance updated on Digital Verification Service checks

The Home Office has issued an updated version of its ‘Employer’s guide to right to work checks’ document, with the changes primarily related to simplifying the information on digital checks for employers of British and Irish citizens who have a valid passport (or Irish passport card). The new version has removed various technical details which were previously intended for providers of these digital verification services, and revised the relevant terminology, so that ‘Digital Verification Service (DVS)’ now includes both the terms Identity Service Providers (IDSPs) and Identity Document Validation Technology (IDVT). This is stated to align the guidance with the terminology used in the UK digital identity and attributes framework and the Data (Use and Access) Act 2025. Guidance and requirements specifically for DVS are now set out in a separate, supplementary code for digital right to work checks. The relevant guidance for employers has been revised. Although it is not currently mandatory for employers to use a DVS certified against the ‘trust framework’ and the supplementary code, this position will change ‘in the near future’, and it will become mandatory to use a DVS listed on the register of certified DVS (maintained by the Office for Digital Identities and Attributes (OfDIA)). In other changes, the new version reiterates that an original expired BRP is not proof of a right to work, and instead an online check must be taken. It also confirms that short-term entry clearance vignettes are being phased out, and that increasingly persons recently issued entry clearance will only have their eVisa to rely on for these purposes, so will need to create a UKVI account as soon as possible and can do this from overseas. In relation to asylum seekers with a pending claim, the guidance now states that they can also volunteer whilst their claim is considered without being granted permission to work, but they can only carry out 'paid' work if they have been granted permission to work under the Immigration Rules, Part 11, paras 360 or 360C. Previously the reference in our quotation marks to ‘paid’ work stated ‘voluntary’ work

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