A Fair Deal for Staff Pensions: staff transfers from central Government (New Fair Deal) was the revised guidance issued in 2013 to central government departments and agencies. On compulsory transfers under New Fair Deal, transferred staff have to be given continued access to the public service pension scheme they participated in immediately before transfer.

 

This is in contrast to the Best Value Staff Transfers (Pensions) Direction 2007 (Best Value Direction), which requires local authorities to ensure that the pension benefits of transferring staff are protected by the contractor either becoming an admission body in the LGPS or the contractor offering a pension scheme that is either broadly comparable to or better than the LGPS.

 

Under the consultation, the DCLG is proposing to remove the option for contractors to provide a broadly comparable pension scheme on transfer. In line with New Fair Deal, contractors will be required to become an admission body in the LGPS. The Best Value Direction will then be revoked.

 

The proposals amend the LGPS Regulations by introducing a new category of employee, known as a ‘protected transferee’,and a new category of scheme employer, known as a ‘protected transferee employer’. A ‘protected transferee employer’ will be required under the LGPS Regulations to enter into an admission agreement with the administering authority of the LGPS fund that the employees participated in immediately before being compulsorily transferred.

 

But do the draft provisions fully align with New Fair Deal? In a number of respects the proposals are not aligned. For example, there is no requirement on a second or subsequent generation transfer to put transferring employees back into the LGPS if they currently participate in an incumbent contractor’s broadly comparable pension scheme. This is out of step with New Fair Deal.

 

In addition, the provisions seem to extend to employers not currently caught by New Fair Deal or the Best Value Direction. ‘Protected transferees’ covers all LGPS active or eligible employees who are employed by scheme employers or admission bodies (excluding the police and higher education employers), and who are compulsorily transferred to a different employer who does not offer membership of a public service pension scheme. This is wide enough to catch existing admission bodies that are outside the scope of New Fair Deal and the Best Value Direction. Was this what was intended?

 

It will be interesting to see whether the proposed amendments to the LGPS Regulations are revised and refined following the end of the consultation process.