New and old Fair Deal policy, TUPE regulations, bulk transfers and comparability assessments; GAD support for public sector organisations.
Important announcement: 18 February 2019
Important announcements: 1 July 2014
Actuarial assumptions for broad comparability assessments (SUPERSEDED by the 18 February 2019 announcement)
New Fair Deal guidance
The government published the new Fair Deal policy in October 2013. The old Fair Deal policy may still apply to a specific staff transfer if permitted by the new Fair Deal policy or if outside the coverage of the new Fair Deal policy.
In all cases, it is for the contracting authority/commissioners to determine whether the Fair Deal policy applies and, if so, whether a staff transfer is covered by old or new Fair Deal.
Employee contribution changes
Broad comparability relates to the protection of transferring employees’ future pension rights.
The idea is to make sure that transferring staff are entitled to pensions in respect of future service that are worth as much as they would have had, were they to have remained with their original employer.
For a pension arrangement to be assessed as being “broadly comparable” to a public sector pension scheme, it does not need to offer identical benefits. However, it must offer the same range of benefits, with the same (or greater) overall value.
The principles on which broad comparability is assessed are set out in the policy guidance (see links in the “Government policy documents” and “Other documents” sections below).
These include both tests of financial and qualitative value.
There are 2 alternative approaches to certifying broad comparability, namely an individual assessment or a ‘passport’.
The pension scheme offered by the new employer is compared with the original public sector pension scheme in the context of the actual employees who will transfer as part of a specific contract. Once broad comparability is achieved, the new scheme will be certified as broadly comparable, but only for this specific transfer.
The pension scheme offered by the new employer is compared with the relevant public service pension scheme, as it applies to a wide range of membership. Once broad comparability is achieved, the new scheme will be certified as broadly comparable for any transfer of employees who are eligible for membership of that public service scheme within the range of membership.
For a limited number of staff, for a single staff transfer, then it may be easier to achieve broad comparability by ‘individual assessment’. If an organisation intends to bid for many public service contracts, then it may be more convenient to establish a scheme which is eligible for a ‘passport’ certificate. A passport certificate is valid for a period of up to 2 years and during that period it can be used for different staff transfer exercises within its validity. Passport certificates may be withdrawn before expiry if, for example, there have been changes in the benefits of either the public service pension scheme or the new employer’s pension scheme. Further information is set out in: Changes to the passport certificate system for broad comparability.
As an alternative to having a client specific passport certificate, bidders may consider using one of the centralised multi-employer pension schemes specifically set up to provide pensions for former public service workers.
Passport certificates are allocated a unique reference number. Contracting authorities can check if a passport remains in force by referring to ‘in force’ passport list (see). The list is updated monthly and includes passport certificates held by centralised multi-employer pension schemes.
All potential clients of GAD should note that GAD charges fees for the assessment and certification of broad comparability. These fees are discussed and agreed before work commences.
Transfers of past service rights
Contractors participating in a compulsory transfer of employment from the public sector are normally required to offer staff the option to transfer their accrued pension rights, in respect of past service, into their new pension scheme.
GAD represents public sector organisations in negotiations regarding the terms under which members’ accrued pension rights will be transferred.
Some public sector pension schemes take actuarial advice from other actuaries instead of GAD, and, in that case, those other actuaries would normally negotiate the transfer terms.
There are two distinct aspects to the transfer of pension rights:
negotiation of terms - this involves discussions between GAD and the contractor’s actuary on the basis for calculating the transfer values, and the credits which would be granted to members in the receiving scheme.
calculation of transfer values - once agreement has been reached and the transfer of employment has taken place, employees will normally have a period of three months to decide whether to transfer their past service benefits or to leave them in their previous scheme. Once the members have made their decisions and the appropriate data have been collected, the calculation of the bulk transfer amount for those employees who have opted to transfer is made by GAD, and checked by the receiving scheme’s actuary.
GAD Staff Transfers Team - Engagement with other government stakeholders
Much of the information listed below relates to the old Fair Deal policy and may not be relevant under the new policy. If you have any queries about the information contained in this section of the website or would like clarification of whether this is relevant to a particular staff transfer, please contact us for further information.
All previous documents can be found on the archived GAD Website
Government policy documents
Fair Deal policy
Cabinet Office statement of practice on staff transfers in the Public Sector
- 2013 statement Staff transfers in the Public Sector, revised December 2013
- 2007 statement Staff transfers in the Public Sector, revised November 2007
- 2000 statement Staff transfers in the Public Sector, January 2000
- Statement of Practice by the Government Actuary (May 1999) Please note that this document only applies to staff transfers taking place under the old (pre-2013) Fair Deal policy
- Security of pension benefits – differences between public service and private sector schemes
Ask GAD to advise you
As a public sector organisation you can commission GAD to advise you on transfers of employment
The following links provide further information on the Fair Deal 2004 guidance. If the staff transfer is subject to the new Fair Deal 2013 guidance and it has been established that broad comparability and bulk transfer arrangements in the new guidance apply to that staff transfer, please provide details and contact us for further information.
Redundancy and injury benefits
Some redundancy and injury benefits take the form of early retirement pensions or lump sums which are similar to the pension scheme benefits and are paid through similar channels.
The Cabinet Office has issued guidance on these benefits stressing that it is imperative that any public contract resulting in the transfer of staff stipulates clearly that all redundancy benefits and options are taken on by the new employer.
To discuss your requirements, please email firstname.lastname@example.org.