Public Sector out-sourcing to be made easier? This article seems to be saying that the 'Fair Deal' on pensions for transferring public sector staff under TUPE will be reviewed to enable private sector employers to keep transferring staff in their public sector schemes.
This is excellent news for those companies biding for public sector work and great news for the employees. We will have to wait for the detail...that's where the devil is...
HMT to allow transferred public sector workers access to old schemes
Professional Pensions | 19 Jul 2012 | 15:11
The government may offer public servants who are transferred to private sector contractors the ability to remain in their public sector schemes.
Chief secretary to the Treasury Danny Alexander said in a written statement that the government will "retain the overall approach" of the Fair Deal policy, which says employees transferred from public to private sector must be offered comparable benefits.
However, Alexander added the government will deliver this goal by "offering access to public service pension schemes for transferring staff".
"When implemented, this means that all staff whose employment is compulsorily transferred from the public service under TUPE, including subsequent TUPE transfers, to independent providers of public services will retain membership of their current employer's pension arrangements," he said.
"These arrangements will replace the current broad comparability and bulk transfer approach under Fair Deal, which will then no longer apply."
Nabarro partner Anne-Marie Winton explained: "Private sector companies will be allowed to join the public sector schemes as employer; currently this is only possible with the LGPS, and very occasionally the NHS pension scheme.
"So the company will have to contribute to the public sector scheme it joins, with the taxpayer funding the rest of the ‘employer' costs.
"The private sector company will only want to be responsible for meeting the costs for its employees, so there will need to be a deed of participation setting out what the company pays, what the employees pay and how its share of the running expenses of the scheme are met."
Winton added that the decision to change Fair Deal may wipe out certain sections of the pensions industry.
"There is quite an industry for providers of stand-alone broadly comparable pension schemes," she said.
"This may well be the beginning of the end for them, as given the choice, assuming there will be one, it may be easier for companies to opt into a public sector scheme, and easier for ex-public sector employees to understand this route."
Alexander said the government will publish proposals for the new system in the autumn.
The review of the Fair Deal policy was launched last year. The government said it was a bid to make it easier for small to medium sized companies to bid for public services contracts, arguing only the largest firms could afford to offer pension schemes comparable to those offered by the public sector.
Last year, consultants warned that a lack of clarity over the future of Fair Deal was forcing private sector companies to negotiate poor pension deals for their workers