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Impact of mergers/acquisitions on pension schemes

Mergers and acquisitions are a regular feature of business life. One company may acquire another, two companies may merge or business and people may be transferred from one company to another. In many cases, this kind of activity affects the pension schemes operated by the companies involved.

When a merger or acquisition is about to take place, an employer normally notifies employees to explain how their contracts of employment are affected. Since pension benefits are part of an employee’s conditions of employment, the employer should also inform employees of how the merger or acquisition affects pension arrangements.

Where pension arrangements are affected, there is normally a consultation process between the representatives of the pension scheme members and the employer.

If members’ pension benefits are being transferred to a new scheme without consent, the trustees are required to consult with members.