LGPS: Fair Deal – strengthening pension protection

The consultation published by the Ministry of Housing, Communities & Local Government (MHCLG) sought views on a number of proposals to amend the Local Government Pension Scheme (LGPS) in England and Wales, to bring parity to the pension protection for staff outsourced from central government (“Fair Deal”) and local authorities (“Best Value Direction”) to private sector contracts. This consultation had been long awaited, as the Fair Deal guidance first came out in 1999 and the Best Value Direction was issued in 2007. 

The PLSA’s response is supportive of the vast majority of the proposals outlined, which look to allow transferred employees to continue to have access to LGPS membership and to find new ways for employers to participate in LGPS. The new regulations will also provide more certainty on the type of pension costs contractors could face for outsourced work. 

However, there are additional challenges that should be considered as well, including the following: it could be difficult for scheme members to make an informed decision on transferring past service benefits; government will also have to take account of how the amendments may increase administrative burden on administering authorities; the proposed definition of protected transferee needs to be clarified further to ensure that it does not hinder employers form tackling legacy liabilities; and guidance is needed from the Scheme Advisory Board (SAB) on the deemed employer approach.