Consultation on 'Fair Deal' policy: public sector staff transfers and pensions

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07 March 2011

The Government yesterday commenced a public consultation on the future of "Fair Deal".

The consultation opened yesterday and will close on 15 June 2011.

Current Fair Deal policy requires that where staff transfer from the public sector to the private sector, the new employer must provide a broadly comparable pension scheme for future service and allow those former public sector staff to transfer their accrued pension rights in their previous public sector scheme to the new scheme. This policy can be met in relation to Local Government contracts by a contractor (or other body) becoming "admitted" to the Local Government Pension Scheme.

The consultation comes in response to recommendations made in an interim report from the Independent Public Service Pensions Commission which recommended that the policy may inhibit the transfer of services from the public to the private sector.

The Government is seeking views on how the Fair Deal policy operates. It wishes to assess the case for changing the current Fair Deal policy and the approach to be taken in the future. The consultation will also consider what should happen in relation to former public sector employees who transferred to the private sector and who are due to return to the public sector.

Michael Hayles, a senior associate in the Burges Salmon pensions team, comments "The review of the "Fair Deal" policy will be of key importance to the way in which public bodies outsource their services and will potentially have a significant impact on transferring public sector workers".

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