Understanding your workplace pension is an important part of planning for your financial future. If you’ve recently received a letter or heard rumours that your employer might be changing your pension scheme, it’s natural to feel uncertain or even concerned.
In this article, we’ll explain the rules around employer pension scheme changes in the UK, your rights as an employee, and what to do if you’re affected.
Can an Employer Legally Change Your Pension Scheme UK?
Yes, but there are rules they must follow. In the UK, employers are allowed to make changes to workplace pension schemes. However, they must follow employment law and pension regulations, and in most cases, they must consult with affected employees or their representatives before making changes.
The process and your rights will depend on the type of pension scheme in place and what’s being changed.
Types of Pension Schemes and What Can Be Changed
- Defined Contribution Schemes (DC)
- These are the most common workplace pensions today.
- You and your employer contribute money into your pension pot, which is invested until retirement.
- Employers can sometimes change the amount they contribute or the provider used.
- They must inform you and, in many cases, consult you if contributions are being reduced or major changes are being made.
- Defined Benefit Schemes (DB)
- These promise a retirement income based on your salary and length of service.
- They are less common now due to high costs for employers.
- If your employer wants to close or reduce benefits in a DB scheme, they must consult with you or your representatives and may need approval from The Pensions Regulator.
Your Employer’s Responsibilities
If an employer wants to change your pension scheme, they must:
- Consult for at least 60 days if they have 50 or more employees and are changing significant aspects (such as contribution levels or scheme closure).
- Provide clear information about what is changing and how it affects you.
- Ensure continued compliance with auto-enrolment rules – for example, maintaining the legal minimum contribution levels.
It’s also worth checking if your employment contract or collective agreement mentions your pension scheme. Some changes may not be allowed without your explicit consent.
What If I Don’t Agree with the Changes?
You do have some options:
- Raise concerns with your HR department, union representative, or employee forum.
- Check your contract – if pension terms are part of your contract, your employer may need your agreement to make changes.
- Contact the Money and Pension Service or MoneyHelper for free, impartial guidance.
- In some cases, you may be able to opt out of the scheme or transfer your pension pot elsewhere, though this can have financial consequences and should be carefully considered.
Final Thoughts: Stay Informed and Ask Questions
Changes to your pension can impact your long-term financial wellbeing, so don’t be afraid to ask questions and seek advice. Employers are legally required to act fairly and transparently when making changes, and you have a right to understand how these changes affect you.
If you’re feeling overwhelmed, reach out for free help from:
- MoneyHelper – 0800 011 3797 or moneyhelper.org.uk
- The Pensions Ombudsman – if you believe your employer hasn’t followed the rules
- Citizens Advice – for employment-related support
Remember:
You’ve worked hard for your pension – it’s only fair that any changes are made responsibly and with your best interests in mind.
2 Responses
This post does aBlog Comment Creation great job clarifying that while employers can change pension schemes, they’re still legally required to consult employees first—something many people might not realise. I’d be curious to know more about what happens if an employee doesn’t agree to the proposed changes, especially in defined contribution schemes where employer contributions might be reduced.
That’s a very insightful and important question — especially as more employers look to cut costs by adjusting their pension contributions in defined contribution (DC) schemes. Here’s a clear breakdown of what happens if an employee doesn’t agree to proposed changes to their pension scheme:
Can an Employer Change Pension Contributions Without Agreement?
In short: no, not unilaterally. Pension contributions form part of your overall employment contract. If an employer wants to reduce their contributions to your pension (e.g., from 8% to 5%), they are attempting to change a contractual term, which requires your agreement.
If You Don’t Agree – What Happens?
If you refuse to accept the changes, the situation becomes more complex, but you do have rights.
1. Negotiation & Consultation
Employers are legally required to consult with affected employees (or their representatives) if more than 50 staff are affected.
In smaller changes, individual consultation should still happen.
You can ask questions, propose alternatives, or refuse to agree.
2. Employer Options if You Refuse
Your employer may:
Leave your current contributions unchanged (if they back down),
Try to persuade you with incentives (e.g. higher salary instead),
Or, in some cases, they may terminate your existing contract and offer a new one with the lower contributions.
This is called “dismissal and re-engagement” or “fire and rehire” – a controversial practice, but not illegal if done correctly.
3. Legal Protections You Have
If you’re dismissed for not accepting new terms:
You may be able to claim unfair dismissal if you’ve worked there for 2 years or more.
The employer must show they had a sound business reason and followed a fair process.
If not, you can challenge it at an Employment Tribunal.
Defined Contribution Pension Changes: Key Points
Employer minimum contributions are protected by law:
3% employer (based on qualifying earnings) under auto-enrolment rules.
They cannot go below this unless you opt out.
If your contract or company scheme offers more generous contributions, these are protected by contract law, not just pension regulations.
What Should You Do?
Review your employment contract and pension documents.
Ask your employer for a written explanation of the proposed changes.
Seek advice from your union (if you’re a member), ACAS, or Citizens Advice.
Consider legal advice if a “fire and rehire” strategy is being used.
Don’t Be Pressured
You are within your rights to ask: Why the change is happening, whether it affects everyone equally, if you’ll be compensated elsewhere (e.g., higher salary), and how it affects your long-term retirement plans.