McKavney v Serco: when a TUPE transfer does not trigger early pension payment

The High Court has dismissed an appeal by a former Magnox employee who argued he was entitled to early payment of his deferred pension from the Serco Pension and Life Assurance Scheme (SPLAS) following his redundancy in 2015. In McKavney v Serco Group Plc & Ors [2026] EWHC 508 (Ch), Mr Justice Trower upheld the Deputy Pensions Ombudsman's determination, finding that neither the TUPE transfer of the appellant's employment from Serco to a subsidiary later acquired by AMEC, nor his subsequent redundancy by that subsidiary, engaged the early payment provisions of Section F of the SPLAS.

Ian McKavney had originally been a member of the Magnox section of the Electricity Supply Pension Scheme (ESPS), a public sector scheme carrying protected persons status under the Electricity (Protected Persons) (England and Wales) Pension Regulations 1990. When his employment transferred to Serco in 2005, his accrued benefits moved with him into Section F of the SPLAS, a section specifically designed to replicate the ESPS protections and comply with the Protected Persons Regulations (PPR). In 2012, his employment transferred again under TUPE to Energy Safety and Risk Consultants (UK) Ltd, which was then acquired by AMEC. He chose not to transfer his SPLAS accruals to the AMEC scheme within the two-year window afforded by Regulation 6(5) of the PPR, and was made redundant by AMEC in November 2015, aged 56.

The central question was whether Sub-Rules 4.2.1.3 and 6.2.3.1 of Section F — which provide for immediate unreduced early retirement benefits where a member is compulsorily retired from Service due to redundancy or reorganisation — were engaged either at the point of the TUPE transfer or on his subsequent redundancy from AMEC.

Trower J held that they were not. On Sub-Rule 4.2.1.3, the phrase "compulsorily retired from Service by his Employer" necessarily connoted the involuntary termination of the member's contract of employment. A TUPE transfer does not terminate a contract; it transfers it. The member is not compelled out of employment but merely faces a change of employer, with the contract deemed in law to have originally been made with the transferee. Accordingly, no retirement — compulsory or otherwise — had occurred when the appellant's active membership of the SPLAS ended.

On Sub-Rule 6.2.3.1, the court accepted that "Service" (as defined, meaning employment with any Serco group employer) did come to an end when AMEC acquired the transferee, but held that the Sub-Rule required something more than the mere ending of Pensionable Service — it required Service itself to have ended in consequence of redundancy or a relevant reorganisation. A TUPE transfer followed by a third-party acquisition did not constitute either. The court found support for this reading in the language of the equivalent ESPS rules and in the commercial logic of the PPR framework, which was explicitly incorporated into Section F.

A particularly significant strand of the judgement concerned the interaction between the early payment provisions and the PPR's transfer rights. Trower J agreed with the Ombudsman that, had the Appellant's construction prevailed, the appellant's pension would have come into payment immediately upon leaving Serco's corporate group, extinguishing his Regulation 6(5) right to transfer accrued benefits to a PPR-compliant alternative scheme. Sub-Rule 1.2 of Section F stated expressly that the Magnox section was intended to meet the requirements of the PPR and was subject to those regulations; a construction incompatible with that framework was therefore unlikely to be correct.

The court also addressed the scope of "reorganisation" as used alongside "redundancy" in the Sub-Rules. Trower J indicated that the intended meaning was the narrower sense — dismissal arising from a reorganisation falling short of a statutory redundancy, akin to the circumstances considered in Shawkat v Nottingham City Hospital NHS Trust (No 2) [2001] IRLR 555 — rather than any broad business restructuring that might incidentally result in a change of employer.

The appeal was dismissed in its entirety.

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