The Government has introduced a new consultation requirement for proposed changes to pensionable salary.

Since 6 April 2006, employers have had to consult scheme members over proposals to make certain changes to schemes. These include increasing member contributions, cutting off the build-up of further benefits and changing accrual rates. Since introducing the requirements, however, the Government has come to the view that employers should be consulting members on other matters.

From 6 April 2010, the Government is requiring employers to consult members over proposed changes to the amount of pensionable earnings which a scheme uses to calculate pension. The Pensions Regulator is keeping an increasingly close eye on whether employers are following the requirements and has the power to impose fines of up to £50,000 for non-compliance. Employers should therefore check their consultation obligations carefully before making any changes to their schemes.