New and old Fair Deal policy, TUPE regulations, bulk transfers and broad comparability assessments; GAD support for public sector organisations.
GAD staff transfers
Actuaries at GAD have a wealth of experience working within many areas of government. GAD staff transfer actuaries possess a wealth of experience and expertise on pensions and on the government’s ‘Fair Deal for staff pensions - 2013’ (New Fair Deal) policy and the ‘Cabinet Office Statement of Practice on staff transfers in the public sector’ (COSOP) policy.
Further information of the work we do can be found in: Information sheet on the GAD Staff Transfers team.
Important information on the impact of the McCloud judgment on staff transfers: updated October 2020
GAD continues to provide assistance for staff transfer cases
Following the McCloud judgment in December 2018, the government has proposed changes to the main public service pension schemes.
In conjunction with the main scheme stakeholders within government, GAD has been looking, and continues to look, in detail at the latest developments relating to the McCloud judgment and considering the implications of the judgment for work related to staff transfers.
We aim to keep our staff transfer clients (primarily contracting authorities) informed on the latest developments that relate to their cases. If you are a client and have any questions on an ongoing cases, please speak to your usual GAD advisor.
Potential future staff transfer clients should contact GAD to discuss their situation. The proposed changes to public service pension schemes will impact different transfer cases in different ways. For some transfer cases it may become necessary for GAD to pause work whilst the implications of the judgment are considered. For other cases, for example New Fair Deal bulk transfers from private sector schemes into public service pension schemes, GAD expects to continue work as normal. Information on the work we do is given in: Information sheet on the GAD Staff Transfers team. If you would like further information please contact: firstname.lastname@example.org.
Background information on the impact of the McCloud judgment
Following a review of the public service pension schemes by the Independent Public Service Pensions Commission, initially reported on in October 2010, the public service pension schemes were reformed. New ‘CARE’ (career average re-valued earnings) schemes were put in place, typically with effect from April 2015.
Members who were within 10 years of their Normal Pension Age (NPA) on 1 April 2012 qualified for transitional protection of their legacy benefit - for most meaning they continued to accrue benefits in the legacy schemes beyond April 2015. Some schemes also provided ‘tapered protection’ where members who were slightly more than 10 years from their NPA on 1 April 2012 remained in their legacy schemes after April 2015, before moving into their reformed schemes.
Following claims brought by judges and firefighters, in December 2018 the Court of Appeal ruled that the transitional protection constituted unlawful age discrimination – referred to as ‘the McCloud judgment’. In July 2019, in a Written Ministerial Statement to Parliament, the government confirmed its intention to remedy the difference in treatment across all the main public service pension schemes.
In March 2020, in a further Written Ministerial Statement to Parliament, the government set out that in order to do this it was considering proposals which would allow relevant members to make a choice as to whether they accrued service in the legacy or reformed schemes for periods of relevant service.
Further information on the impact of the McCloud judgment on staff transfer cases and on changes to GAD’s broad comparability assessments and bulk transfer work can be found in this section.
Information for clients with cases directly impacted by a change to GAD’s work:
- A note on suspension of work on broad comparability certificates:
- A note on bulk transfer work (for Machinery of Government transfers only):
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.
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: email@example.com.
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, 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 12 October 2020, there are no valid passport certificates in force. If you require any further information please contact: firstname.lastname@example.org.
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.
A document setting out the actuarial assumptions used for broad comparability assessments can be found below:
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.
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
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
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
Important announcements (2013-2015)
Actuarial assumptions for broad comparability assessments (SUPERSEDED by the 18 February 2019 announcement).
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.
To discuss your requirements, please email: email@example.com.