The Occupational and Personal Pension Schemes (Consultation by Employers and Miscellaneous Amendment) Regulations 2006 (the Consultation Regulations) provide that, before making certain “listed changes”, employers must provide written information and conduct a consultation with affected members and their representatives. The Consultation Regulations are to be amended with effect from 6 April 2010 to include an additional “listed change” covering the freezing or capping of pensionable earnings after that date.

The amendments are set out in the Occupational and Personal Pension Scheme (Miscellaneous Amendments) Regulations 2010 (the Amending Regulations) and the listed change extension affects changes to pensionable pay proposed by employers of 50 or more employees.

For the purpose of the Amending Regulations, employers of defined benefit schemes are required to consult where there is a change:

  • to the elements of pay that constitute pensionable earnings;
  • to the proportion of pay which is pensionable; or
  • to the limit in the amount of any element of pay which is pensionable.

For these purposes, “pensionable earnings” are defined as the earnings by reference to which pension benefits are calculated, and an “element of pay” includes basic salary, pay rises, overtime and bonus payments.

The Government considers that changes to revaluation or indexation are not listed changes for these purposes and consultation is not required in relation to such changes. In addition, changes that do not have a “lasting effect” are not included so, for example, where revisions are made to the definition of pensionable salary simply to effect a salary sacrifice arrangement, would not be considered a listed change.

View the Amending Regulations.