Guidance

Staff transfers: public service pension schemes

New and old Fair Deal policy, TUPE regulations, bulk transfers and broad comparability assessments; GAD support for public sector organisations.

GAD staff transfers

GAD’s staff transfers team possesses a wealth of experience and expertise advising on the treatment of pensions in staff transfers to, from and within the public sector.

In particular, GAD can advise public sector clients in connection with staff transfers covered by the government’s Fair Deal for Staff Pensions - 2013 (Fair Deal) policy, the Cabinet Office Statement of Practice on staff transfers in the public sector (COSOP) policy or the Best Value Authorities Staff Transfer (Pensions) Direction 2007.

Further information can be found here: Information sheet on the GAD Staff Transfers team.

If you have an upcoming staff transfer, particularly one covered by one of the above policies, please contact GAD at: stafftransfers@gad.gov.uk.

If you are an existing GAD client and have any questions on an ongoing case, please speak to your usual GAD advisor.

Latest news

Important information on the impact of the McCloud judgment : updated August 2021

Following the McCloud judgment in December 2018, the government has proposed changes to the main public service pension schemes to remove the age discrimination issues identified (referred to as ‘remedy’ below).

The proposed changes to public service pension schemes will impact different transfer cases in different ways. For some transfer cases it has been necessary for GAD to pause work whilst remedy is being progressed. For other cases, for example New Fair Deal bulk transfers from private sector schemes into public service pension schemes, GAD continues work as normal.

The McCloud judgment has impacted on two of the main strands of work that GAD carries out in staff transfer cases, namely broad comparability assessments and pension bulk transfer work.

Broad comparability assessments

On 6 August 2020 GAD issued a note explaining that the certification of broad comparability had been suspended in response to the McCloud judgment. A copy of that note (which includes further background information) can be found here:

Q&A for Contracting Authorities - Suspension of Broad Comparability Inc Passports (6 August 2020)

Since then, HM Treasury, the Ministry of Justice and MHCLG have been consulting on proposed remedies. A Bill seeking to legislate for remedy was introduced into the House of Lords on 19 July 2021.

Following an analysis of developments, and discussions with stakeholders, GAD has decided to start a rolling programme of recommencing some broad comparability work. There are two important points to note in connection with this recommencement programme:

  • Initially GAD’s broad comparability assessments will only involve the assessment of Career Average Revalued (CARE) benefits for those members eligible for remedy. For transfers prior to 1 April 2022, there may be further adjustments needed to address McCloud remedy. If so, GAD will notify Contracting Authorities as soon as possible.

  • Contracting Authorities need to ensure that when staff move to their new pension scheme with effect from the transfer date, they do not suffer a reduction in take-home pay, for example due to differences in scheme member contribution rates. Click the link below for further information on this subject:

Fair Deal: A note by GAD on take-home pay protection for transfers of staff between public service pension schemes (PDF, 125KB, 2 pages)

For existing cases which were suspended, your usual GAD advisor should be in touch to discuss recommencement, and similarly for cases which were not started in earnest prior to August 2020. Alternatively, please feel free to pick up the phone to your normal GAD advisor. For new cases, and for any other queries, please contact: stafftransfers@gad.gov.uk.

Pension bulk transfers

On 10 September 2020 GAD issued a note explaining that pension bulk transfer work in Machinery of Government/COSOP transfers had been paused whilst uncertainty remained around the details of remedy. A copy of that note (which includes further background information) can be found here:

Q&A for Contracting Authorities - Machinery of Government bulk transfer work (10 September 2020)

Scheme managers have not yet decided to recommence bulk transfer work in transfers that may be affected by remedy, until a number of technical issues have been resolved. As this decision has been made collectively by the scheme managers, GAD is unfortunately unable to deal with requests by or on behalf of individuals seeking to secure bulk transfer terms in advance of the general recommencement of bulk transfer activity.

New Fair Deal bulk transfer work, for example on contract retenders, is unaffected and continues as normal. For new cases, please contact: stafftransfers@gad.gov.uk.

Net take-home pay protection on staff transfers: Important information for Contracting Authorities

Contracting Authorities should be aware of the following important information concerning the protection of take-home pay on transfers of staff:

Fair Deal: A note by GAD on take-home pay protection for transfers of staff between public service pension schemes (PDF, 125KB, 2 pages)

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.

New Fair Deal guidance - A GAD technical bulletin (9 October 2013)

Broad comparability

Broad comparability relates to the protection of transferring employees’ future pension rights.

The idea is to make sure that a new employer offers transferring staff a package of benefits in respect of future service with an overall value that is worth as much as they would have had, were they to have remained with their original employer. In addition, staff must not suffer a reduction in take home pay at the point of transfer, as a result of a higher member contribution rate, unless a compensatory pay uplift is given.

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. A broad comparability assessment includes both quantitative and qualitative tests.

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).

If a transfer is under New Fair Deal, and members are transferring back to the public sector scheme that they would have been in had the members not be subject to any compulsory transfers of employment under Fair Deal, then a broad comparability assessment is normally not necessary. For further detail please contact: stafftransfers@gad.gov.uk.

There are 2 alternative approaches to certifying broad comparability, namely an individual assessment or a ‘passport’.

Individual assessment

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.

Passport certificate

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, and, subject to any eligibility restrictions, could be used for any transfer where broad comparability against the relevant public sector scheme is required, for the life of the certificate.

A passport certificate is usually 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, organisations 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. The list is updated monthly and includes passport certificates held by centralised multi-employer pension schemes.

As at 26 August 2021, there are no valid passport certificates in force. If you require any further information please contact: stafftransfers@gad.gov.uk.

Further information

Fees

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.

Process

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.

Further information on bulk transfers back into a public service pension scheme can be found here: Working with GAD on bulk transfers back into a public service pension scheme under ‘Fair Deal’ (22 August 2019).

GAD Staff Transfers Team - Engagement with other government stakeholders

GAD Staff Transfers Team - Engagement with other government stakeholders

Government policy documents

Fair Deal policy

Cabinet Office statement of practice on staff transfers in the Public Sector

Other documents

Older information

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.

Employee contribution changes

Employee contribution changes 2013 (9 April 2013)

Employee contribution changes 2013 (14 February 2013)

Important announcements (2013-2015)

Broad comparability against the NHSPS – Important Announcement (23 February 2015)

Broad comparability against the PCSPS – Important Announcement (19 August 2014)

Broad comparability against the LGPS – Important Announcement (12 March 2014)

Broad comparability against the LGPS – Important Announcement (27 November 2013)

Broad comparability against the LGPS – Important Announcement (29 January 2013)

Archived GAD website

Further documents can be found on the archived GAD Website.

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.

Ask GAD to advise you

As a public sector organisation you can commission GAD to advise you on transfers of employment.

Contact us

To discuss your requirements, please email: stafftransfers@gad.gov.uk.

Published 13 October 2013
Last updated 27 August 2021 + show all updates
  1. The latest news on the impact of the McCloud judgement has been updated following the Government’s introduction of a Pensions Bill to the House of Lords on 19th July 2021.

  2. Important information on the impact of McCloud judgment on staff transfers, and other changes.

  3. Links added to latest update.

  4. Important Announcement: 18th February 2019 - Actuarial assumptions for broad comparability assessments

  5. GAD Staff Transfers team information sheet added.

  6. Broad comparability against the NHSPS – Important Announcement (23 February 2015)

  7. Broad comparability against the Principal Civil Service Pension Scheme in Great Britain (PCSPS) - Important announcement - 19 August 2014

  8. Broad comparability against the Principal Civil Service Pension Scheme in Great Britain (PCSPS) - important announcement - 19th August 2014

  9. Changes to the 'Passport Certificate' section of the web page carried out.

  10. Important announcements: Actuarial assumptions for broad comparability assessments Changes to the passport certificate system for broad comparability

  11. Important announcements: Actuarial assumptions for broad comparability assessments Changes to the passport certificate system for broad comparability

  12. ##Important announcements Actuarial assumptions for broad comparability assessments Changes to the passport certificate system for broad comparability

  13. Updated passport numbers.

  14. Updated staff transfers passport list

  15. Broad comparability against the LGPS: Important announcement (November 2013)

  16. First published.