Consultation outcome

Further consultation on the Fair Deal policy

Published 19 November 2012

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

1. The previous guidance ‘A Fair Deal for Staff Pensions’

The Fair Deal policy applies where a public service is outsourced to be delivered by an independent provider, including private sector businesses and non-profit making organisations such as charitable bodies and social enterprises. The previous policy required the new employer to provide an occupational pension scheme which was broadly comparable with the public service pension scheme staff were leaving.

Staff were also offered the choice of becoming a deferred member of the scheme they were leaving or transferring their accrued benefits to the new scheme, by way of a bulk transfer agreement. Transferred staff were also provided the same protections on subsequent compulsory transfers.

1.1 Background

The interim report of the Independent Public Service Pensions Commission (IPSPC) found that current pension structures, combined with Fair Deal requirements, were a barrier to plurality of public service provision. The government announced at the Spending Review 2010 that it would accept the suggestion to review the Fair Deal policy.

Following an initial consultation in March 2011 the government confirmed via a Written Ministerial Statement on 4 July 2012 that the overall approach to the Fair Deal would be retained, but that this would be delivered by offering access to the public service schemes for staff compulsorily transferred out of the public sector. In November 2012 the government published its response to the consultation which set out its position in more detail.

The initial consultation and the government’s detailed response can be viewed along with old Fair Deal guidance notes

The November 2012 consultation response included further questions to seek views on how the reformed Fair Deal policy should apply to staff that have already been compulsorily transferred out of the public sector under the old Fair Deal.

Question 1	The government welcomes views on the proposed application of the Fair Deal policy to staff previously transferred under the existing Fair Deal. In particular, the government would welcome views on:
	a) whether organisations employing these staff should be able to continue to offer a broadly comparable pension scheme to staff already transferred out under Fair Deal or
	b) whether access to the relevant public service pension scheme should be a term of business for potential bidders for retendered contracts (including incumbent providers)
	c) at what stage in the contracting process employers should be required to set out how they will offer pension provision for transferred staff – through access to the public service scheme or through offering a broadly comparable scheme

The government understands that where staff have been contracted out under the previous Fair Deal policy and contracts are subsequently retendered, a number of different situations may arise:

• employees stay with the existing independent provider

• employees move to a new independent provider

• employees are brought back into the same part of the public sector that they left

• employees are brought back into a different part of the public sector than that which they were originally in

Question 2	The government welcomes views on whether there are any other situations that may arise when contracts covered by Fair Deal are retendered.
Question 3	The government welcomes views on which scheme employees returning before 2015 should be able to access. This could be the one they originally left, the contracting authority’s currently open scheme, or the scheme most broadly comparable to the one they originally left.
Question 4	The government welcomes views on how bulk transfers for employees covered by the existing Fair Deal will work when those contracts are retendered under the new policy.

1.2 Equality impacts

The government has considered the potential equality impacts of the proposed changes to the Fair Deal policy for employees who have already been transferred out of the public sector.

The proposed approach outlined above would mean that employees returning to a public service scheme may see a change to their future benefits. For most of these staff, this change will come about because they will join a CARE scheme from a final salary scheme.

The government does not hold data on the protected characteristics of those people that have been transferred out of the public sector under the Fair Deal. However, the equalities impacts of the change from a final salary to a CARE scheme for the public sector workforce as a whole have been considered by HM Treasury in the ‘Central Equalities Impact Analysis’ published alongside the Public Service Pensions Bill on 13 September 2012. This analysis found that pension scheme members will continue to receive a high quality pension, with a guaranteed payment in retirement protected from high inflation, regardless of their gender, race, age, disability, gender reassignment, pregnancy and maternity, religion or belief, sexual orientation or marital/civil partnership status. Given this, the government does not consider that the proposed features of the new Fair Deal policy will result in any differential impact to persons with any of the protected characteristics. However, the government would welcome further views on this matter.

Question 5

The government welcomes views on whether the proposed approach to the Fair Deal policy for employees that have already been transferred out of the public sector will have differential impacts on people with protected characteristics.

1.3 Fair Deal guidance

Question 6

The government welcomes views on the draft guidance - Annex A and suggestions for further areas that need to be covered.