Pension payments and statutory redundancy pay


Offsetting pension payments not permitted from 1 October 2006

An Explanatory Memorandum on the Employment Equality (Age) Regulations 2006 proposed that the Redundancy Payments Pensions Regulations 1965 be revoked. These Regulations allow employers to offset certain pensions or lump sums that are paid at the time of, or shortly after, redundancy against statutory redundancy payments. The intention of the Regulations is to prevent employers having to make two separate sets of payments in the event of redundancy. There has only been one use of these provisions in the past ten years.

It appeared that the proposal had not been implemented as there is no reference to the 1965 Regulations in the Age Equality Regulations. However, the Department of Trade and Industry (DTI) states, in its website information on redundancy, that the measure ceases to apply from October 2006. In contrast, the Acas website indicated that the measure was not being withdrawn.

In response to our enquiries, the DTI confirmed that the 1965 Regulations have in fact been revoked, not directly, but by the device of repealing the powers that allowed the Regulations to be made in first place, namely section 158 of the Employment Rights Act 1996.

Consequently, from 1 April 2006, the facility to offset pension and lump sum payments against statutory redundancy payments will no longer be available. The Acas guidance has now been corrected.

...back to 28 September 2006

Further information:
Offsetting pensions against redundancy payments
Who qualifies for a redundancy payment?
Explanatory Memorandum to the Employment Equality (Age) Regulations 2006

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