TUPE and pension liabilities

The question before the High Court in Procter & Gamble Company v Svenska Cellulosa Aktiebolaget Sca and another [2012] EWCH 1257 was whether liability for early retirement benefits transferred to SCA. Here Procter and Gamble (“P&G”) sold it’s European business to SCA in 2007, TUPE was applied and the P&G employees transferred across. P&G operared a defined benefit scheme which provided for early retirement benefits.Under TUPE, occupational pension schemes generally do not transfer from the seller to the buyer.  However, any rights and obligations under an occupational pension scheme which do not relate to benefits for “old age, invalidity or survivors” do transfer under TUPE – known as the “Beckmann liability”.Under the P&G occupational pension scheme, early retirement was permitted with the employer’s consent, and one of the key questions for the High Court was whether that benefit transferred.  The High Court held that only the employee’s right to be considered for early retirement benefits in good faith transferred to the buyer.Although the case is helpful in highlighting what aspects of an occupational pension scheme transfer under TUPE/Beckmann principles, it still leaves mainly difficult questions unanswered around pension schemes.