TUPE Transfers are not retirement: High Court clarifies early pension triggers

Background

Mr McKavney was a protected person under the Electricity (Protected Persons) (England and Wales) Pension Regulations 1990 (the EPP Regulations) and was originally employed by Magnox Electric Ltd.

In 2005, his employment transferred from Magnox to Serco under TUPE. He subsequently elected to transfer his pension benefits into the Serco Pension and Life Assurance Scheme (SPLAS). Specific provisions in Section F of the SPLAS applied to former Magnox employees and were expressly intended to mirror the protections provided under the EPP Regulations

In 2012, Mr McKavney’s employment transferred again under TUPE from Serco to ESRC. ESRC was later acquired by AMEC, as a result of which ESRC ceased to be a participating employer in the SPLAS and instead participated in the AMEC pension scheme (ASPS).

Mr McKavney chose not to exercise his statutory right to transfer his benefits from the SPLAS to the ASPS within two years of the TUPE transfer. Consequently, his active membership of the SPLAS came to an end, and he became an active member of the ASPS from 1 July 2012.

In 2015, aged 56, he was made redundant by ESRC. He received an immediate unreduced pension from the ASPS, but no early payment of his benefits under the SPLAS.

Mr McKavney brought a complaint to TPO, arguing that the 2012 TUPE transfer and the subsequent acquisition of ESRC by AMEC amounted to compulsory retirement and / or a reorganisation of the employer’s business under the rules of the SPLAS, entitling him to early payment of his SPLAS benefits.

TPO Decision

TPO rejected the complaint on the basis that, in the context of the SPLAS rules, being retired meant to “stop working” or to “leave one’s job” (para 46) and that the cessation of active membership alone did not qualify as “compulsory retirement from service”. In Mr McKavney’s case, the TUPE transfer preserved the continuity of employment and therefore did not constitute a “compulsory retirement from service” under the scheme rules.

TPO also noted that Section F was intended to be consistent with the EPP Regulations, which confer a two‑year statutory right to transfer accrued benefits rather than providing for automatic payment of benefits on transfer (Regulation 6(5)). This reinforced the conclusion that a TUPE transfer was not intended to trigger early payment of benefits.

High Court decision

The Appeal turned on the proper interpretation of Section F of the SPLAS rules. Applying the principles in Buckinghamshire v Barnado’s [2018] UKSC 55, [2019] ICR 495, the Court focused primarily on the language of Section F, construed in light of the EPP Regulations.

The Section F rules provided for early unreduced pension payments in certain circumstances, including:

• Sub rule 4.2.1.3: “on or after age 50 where the member is compulsorily retired from service by his Employer due to redundancy or a reorganisation of the Employer’s business”; and / or
• Sub rule 6.2.3.1: “(…) where the Magnox Members’s Service ended (…) due to redundancy or a reorganisation of the Employer’s business”.

Mr Justice Trower accepted that the meaning of retirement could depend on the context. However, in this case, Sub-rule 4.2.1.3 required the member to have been “compulsorily retired”, which implied an “involuntary termination of that Member’s contract of employment with the Employer” (para.84). A TUPE transfer involves no termination of employment but instead operates so that the contract continues as if originally made with the new employer. Therefore, it did not satisfy this requirement.

Although this conclusion was sufficient for sub-rule 4.2.1.3 not to apply, the Court also held that there had been no “redundancy” and no “reorganisation” of the kind contemplated by the rule.

The court further held that Sub-rule 6.2.3.1 was not engaged. While Mr McKavney had left pensionable service when he ceased to be an active member of the SPLAS, his Service had not ended in the sense required by the rule. Trower J emphasised that ending service and leaving pensionable service were two distinct concepts. Treating them as equivalent would mean that all members over 50 would have been entitled to immediate payment of their pension following the transfer, an outcome the court considered unlikely.

Finally, the commercial and regulatory context strongly supported this conclusion. If Mr McKavney’s interpretation was correct, his pension would have become immediately payable on transfer, thereby extinguishing his statutory two‑year right under the EPP Regulations to transfer accrued benefits.

Further, the court also noted that Mr McKavney could have transferred his SPLAS benefits within two years of the transfer, in which case he would have been entitled to his full unreduced pension when he was made redundant.

Implications

• TUPE transfers do not of themselves trigger “retirement” or “redundancy” provisions, unless scheme rules clearly provide otherwise.
• Provisions intended to mirror statutory or regulatory protections will be construed consistently with the underlying regulations, particularly where those regulations provide transfer rights rather than benefit crystallisation.
• The distinction between “ending service” and leaving pensionable service” can be critical, and scheme drafting should address this explicitly.
• Trustees and employers should review scheme wording and member communications in the context of corporate activity to ensure expectations are properly managed.

[1]  [2026] EWHC 508 (Ch)

This article is for general information purposes only and does not constitute legal advice or a comprehensive statement of the law. Specific legal advice should always be sought in relation to individual circumstances.

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