LRD guides and handbook May 2017

Law at Work 2017

Chapter 12

Fair Deal for Pensions



[ch 12: pages 476-477]

In the public sector, pensions are subject to a non-statutory code known as Fair Deal for Pensions. Fair Deal sets out how pension issues are to be dealt with where employees are compulsorily transferred from the public sector to private sector providers of public services. In July 2013, the government announced important changes to Fair Deal. 



In summary, staff who are compulsorily transferred from the public sector must be offered continued access to their existing public service pension scheme, instead of a “broadly comparable” private pension scheme. The same applies to any later compulsory transfers to a different service provider (so-called “second generation” transfers).



Replacement guidance, New Fair Deal for Staff Pensions: Staff Transfer from Central Government, was published in October 2013 to implement the changes. The guidance had immediate effect and applies to central government, agencies and the NHS. It also applies to maintained schools (unless covered by other local government arrangements), academies and any other parts of the public sector under ministerial control whose staff qualify for membership of a public service pension scheme.



New Fair Deal does not apply to local authorities, who remain subject to the Best Value Authorities Staff Transfers (Pensions) Direction 2007 (and the Welsh Authorities Staff Transfers (Pensions) Direction 2012 in Wales). A government consultation on new regulations to introduce Fair Deal to staff in the Local Government Pension Scheme closed in August 2016.



Under the Fair Deal guidance, staff should remain members of the public sector scheme they belonged to immediately before the transfer, as long as they:



• remain continuously employed on the delivery of the outsourced service or function; and



• meet the scheme’s eligibility criteria.



Anyone who was eligible to join the scheme before the transfer, but who was not an active scheme member, should remain eligible after the transfer.



Note that:



• Fair Deal is only available to staff in a compulsory transfer;



• it is not available to those who transfer voluntarily;



• it is not available to existing or new staff recruited by the transferee; and



• staff who voluntarily move to a different role with new terms and conditions will cease to be eligible.



Contracting authorities must ensure that the contracts of employment of transferring staff give them the right to remain members of their public sector scheme.



The above is a short summary only. The New Fair Deal guidance can be downloaded from the Gov.UK website (https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/262490/PU1571_Fair_Deal_for_staf_pensions.pdf). 



Advice should be sought from the pensions specialist at your union.