Roderick Ramage, solicitor, www.law-office.co.uk
published by distribution to professional contacts 1 January 2021)
This article is not advice to any
person and may not be taken as a definitive statement of the law in general or
in any particular case. The author does
not accept any responsibility for anything that any person does or does not do
as a result of reading it.
The Transfer of Undertakings (Protection of Employment) Regulations 2006, SI
2006/246 (TUPE) provides the only context in which Beckmann
rights matter. The question, to which
answers remain as unclear as ever, now is whether they are still important. The relevant provisions of TUPE are
regulations 3, 4 and 10. In the absence
of a binding court decision, it is likely that ‘employee’ as defined in TUPE
There are one or possibly two questions to
determine whether pension rights are or are not excluded from the automatic
transfer of a transferring employee’s contract of employment.
first Is the
pension scheme in which the transferring employee has rights an occupational
pension scheme as defined in the Pension Schemes Act 1993, s1? If the answer is ‘No’, the pension rights
pass under TUPE, and the second question need not be asked.
secondly If the
answer to the first question is ‘Yes’, do the rights consist of or include
rights ‘which do not relate to
benefits for old age, invalidity or survivors’? If the
answer is ‘No’, the pension rights are excluded from the transfer, but if the
answer is ‘Yes’, those rights, which are commonly called Beckmann rights, pass
The importance of Beckmann rights is that they
might be of significant value, but no assets are transferred to fund them, and therefore
they must be financed by the transferee.
Beckmann rights take their name from the ECJ
decision in Beckmann v Dynamco Whicheloe
Macfarlane Ltd  IRLR 578 (ECJ). The most common example is that, usually
in public sector but sometimes in paternalistic private sector final salary (or
other defined benefit) schemes, a member
is entitled to an early retirement pension, which is not reduced actuarially
for early payment, if his or her employment is terminated on the grounds of
redundancy or business efficiency.
Beckmann had been employed by the NHS and her employment was transferred to DWM
under TUPE. When DWM dismissed her for
redundancy it refused to pay her the early retirement pension, lump sum and
other benefits to which she would have been entitled under the NHS scheme on
the grounds that those benefits were excluded from TUPE. The ECJ held that:
retirement benefits and benefits intended to enhance the conditions of such
retirement, paid in the event of dismissal to employees who have reached a
certain age, such as the benefits at issue in the main proceedings, are not
old-age, invalidity or survivors' benefits … within the meaning of Article 3(3)
of Council Directive 77/187/EEC ….
The extent of the Beckmann rights is still
unclear, but the old age exemption is, according to the later ECJ case of
Martin v South Bank University case  IRLR 74 (ECJ), limited to
... only benefits paid from the time when an employee reaches the end
of his normal working life as laid down by the general structure of the pension
scheme in question ...
Both Beckmann and South bank concerned public
sector pension schemes. The case of Procter
& Gamble v Svenska Cellulosa
 EWHC 1257 (Ch), in which members had a right to
retire early with the employer’s consent, confirmed that the principles apply
also to private sector schemes and decided that a transferring employee’s right
to apply for early retirement and to have the application considered in good
faith was a right which transferred under TUPE.
Apart from Procter & Gamble there are no
reported decisions how the Beckmann liability is to be calculated. In this case the parties had agreed an
adjustment of the purchase price according to whether or not whether certain
pension liabilities transferred under TUPE.
The court decided that the transferee was liable for only the enhancements
to the member’s benefits and not the benefits from his or her normal pension
age, so the member does not benefit from the windfall of both the benefits as
enhanced and the benefits payable by the scheme from his or her normal pension
There is also a determination of the Pensions
Ombudsman in Hunter v Atos (81760/2) on 28 October 2011 that the complainant,
who had the right to only a deferred pension in his former employer’s pension
scheme, did not have any Beckmann rights.
In this case the rights in issue were rights of contributing members on
leaving employment. Determinations of the Pensions Ombudsman are not precedent binding on
the courts, and therefore cautious transferees and their advisers might wait
until the point is decide by the courts or at least it is explored further in
legal commentary. Nevertheless determinations by the Ombudsman might be useful as guidance, even if only
as a reminder to check whether the enhanced rights are available to members
with deferred rights.
10 Beckmann rights can be derived from not only the transferor’s scheme,
but the scheme(s) of previous employers, if any of the transferring employees had acquired Beckmann rights in earlier employment and
brought the rights with them on previous TUPE transfers.
11 Transferees still need to either (a) examine the rules of occupational
pension schemes, in which the transferring employees have accrued benefits and
to require appropriate warranties by the transferor and either indemnities or
adjustments to the price to reflect the amount of any Beckmann liabilities or
(b) take a deep breath and chance it.
copyright Roderick Ramage
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