New contractors must provide transferring employees with continued access to the Local Government Pension Scheme (LGPS) or a broadly comparable scheme. This requirement differs depending on whether the employer outsourcing a contract is a 'best value authority', or one which falls under other areas of the public sector.

Transfers to a new employer via TUPE include protections for pay, holiday entitlement and other terms and conditions, but not membership of a public sector pension scheme. The government introduced measures which sit alongside TUPE to ensure that pension scheme membership is protected when a scheme member transfers to another employer.

The new contractor must provide the following for transferring staff who were eligible for the LGPS before the transfer date:

Contracts taken on from best value authorities

'Best value authorities' are listed in Section 1 of the Local Government Act 1999 and include:

  • most local authorities
  • police authorities
  • fire and rescue authorities

'The Best Value Transfer (Pensions) Direction 2007' was introduced to protect pension benefits of best value authorities’ employees outsourced as part of a TUPE arrangement.

It ensures that transferring employees are provided with rights to pension benefits that are the same as, broadly comparable to, or better than those they had before the transfer. This requires that the contractor provides either continued access to the LGPS or a 'broadly comparable' pension scheme. The new scheme must receive a ‘broad comparability certificate’ following an assessment by the Government Actuary’s Department (GAD). The certificate must be provided to the outsourcing employer and pension fund.

This means that the new employer must either keep transferring employees in the LGPS under an admission agreement, or give the employees membership of an occupational pension scheme that has been certified as being broadly comparable to the LGPS.

Contracts taken on from other public sector employers

The New Fair Deal is a pension protection which was introduced in 2013. It’s set out in the HM Treasury guidance 'Fair deal for staff pensions (October 2013)’ and requires that a contractor guarantees continued access to the LGPS. It sets out how pension issues are to be dealt with when staff are compulsorily transferred from the public sector to independent providers delivering public services.

The new fair deal policy doesn’t apply to the contractor’s employees who were not compulsorily transferred from the public sector.

Under the guidance the new contractor must keep the transferring employees in the LGPS and enter into an admission agreement with our fund.

You can find the new Fair Deal guidance on the UK government website.