Fair Deal for pensions

Fair Deal is a non-statutory policy that 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 the Fair Deal. In summary, staff who are compulsorily transferred from the public sector must now be offered continued access to their existing public service pension scheme, instead of a “broadly comparable” private pension scheme. The changes also apply to any later compulsory transfers of their employment to a different service provider (so-called “second generation” transfers).

New guidance was published in October 2013 to implement New Fair Deal: New Fair Deal for Staff Pensions: Staff Transfer from Central Government. The guidance had immediate effect and applies to central government, departments, agencies and the NHS. For the first time, it also applies to maintained schools, except where they are 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.

If a TUPE transfer takes place before a pension scheme has been able to make the rule changes needed to accommodate the New Fair Deal, the old arrangements will continue to apply, but the New Fair Deal guidance must be followed in all cases from April 2014.

New Fair Deal does not apply to local authorities. These remain subject to the Best Value Authorities Staff Transfers (Pensions) Direction 2007 (and the Welsh Authorities Staff Transfers (Pensions) Direction 2012 in Wales. Employees in maintained schools who are employed by the local authority will be covered by the Direction rather than Fair Deal.

Under the 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 who transfer compulsorily;

• 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. Advice should be sought from your union.

https://www.gov.uk/staff-transfers-public-service-pension-schemes