GovWire

Guidance: Staff transfers: public service pension schemes

Government Actuarys Department

September 1
15:23 2022

GAD staff transfers

GADs 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 governments 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

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.

Following an analysis of developments, and discussions with stakeholders, GAD is now able to start a rolling programme of recommencing some broad comparability work. There are 2 important points to note in connection with this recommencement programme:

  • Initially GADs broad comparability assessments will only involve the assessment of Career Average Revalued (CARE) benefits. 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.

Actuarial assumptions for broad comparability assessments for accrual from 1 April 2022 for staff transferring between PSPSs (PDF, 207 KB, 5 pages)

  • 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, 125 KB, 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 contact your normal GAD advisor. For new cases, and for any other queries, please contact: stafftransfers@gad.gov.uk.

Pension bulk transfers

On 10 September 2020GADissued a note explaining that pension bulk transfer work in Machinery of Government/COSOP transfers had been paused while uncertainty remained around the details of remedy.

Scheme managers have agreed that they are content to restart paused bulk transfers between public service pension schemes.

Your usualGADadvisor 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 contact your normalGADadvisor.

New Fair Deal bulk transfer work, for example on contract retenders, has been 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, 125 KB, 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.

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