Employer Reducing Contributions?

It is likely that the scheme is being changed principally to contain costs and we would expect your employer to have the right to reduce its contribution (where the rate is going down) unless there is specific wording in your contract that would prevent the employer from reducing its contribution.  We would expect such cases to be rare.

Your employer is required to consult members on the change to give affected employees the chance to consider it and comment.  The decision whether or not to go ahead with the change is one for your employer to make after receiving those comments - the employer can still go ahead even if employees oppose the changes. 

Consultation should normally be done over a 'reasonable period' before the change is due to take place. 

If the employer fails to consult properly, the Pensions Regulator could take action. 

However, the company needs to make sure that the wording of employees' contracts do not prevent them from doing this.

TPAS are not employment experts so you would need to seek legal advice in this area. The Advisory, Conciliation and Arbitration Service (ACAS) may be able to help.  References in your employment contract to specific rates of contribution would be stronger than, say, referring you to a table published on the staff handbook that is in force from time to time. 

If you appear to have a contractual right to a certain level of payment into the pension plan, your employer would have to alter your employment contract to change the level of payments.  A contract of employment is a legal agreement between an employer and an individual employee. Any changes to the contract need that individual's agreement.  For your protection, you should insist on any change being made in writing.

However, an employer and employee can agree, either expressly through a clause or reference in the employee's contract, or through an implied term, that relevant changes in terms and  conditions negotiated by a trade union are incorporated into individual employees' contracts. This is called a 'collective agreement' and may apply whether or not you are a member of the relevant trade union.

Depending on how the contract and the agreement to change it have been drawn up, you might find that your employment contract has to end if you don't agree.  Alternatively, the employer might negotiate a different outcome with you.

ACAS has an advice leaflet titled 'Varying a contract of employment', which can be downloaded from its website or from their helpline 08457 47 47 47, which may be useful.

TPAS cannot give specific advice on whether you should or should not pay more money to the plan yourself.  Nevertheless, if you think your pot is going to be much smaller as a result, you need to give this careful thought.

You could use a pension calculator to illustrate the difference under the current and future contribution rates. 

If you do choose to pay into the pension plan, you will get tax relief on the money you pay in, as follows:

• basic rate tax relief is added to your pension contribution - the GPP provider claims this from HM Revenue each year;
• if you are a higher rate taxpayer, you can claim tax relief at the higher rate through your annual tax return.

No, the consultation and the right to reply is between your employer and the employees.  We cannot go any further than helping you consider your options in the light of what's been put forward.