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CONTRACTORS LOBBY FOR PENSION RULE CHANGES

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Contractors are lobbying the government for a change to pensions rules which could mean companies win more council ...
Contractors are lobbying the government for a change to pensions rules which could mean companies win more council contracts and staff transferred to the private sector receive lower pensions.

The changes, which have been proposed by the Business Services Association after eight months of negotiation with government officers and the Paymaster General, mean companies could cut their salary costs by as much as 10%, according to BSA director general Norman Rose.

The BSA wants a change in the rules which force companies to provide pensions comparable to the local government scheme for transferred local government staff.

Under the Employment Rights Act 1996, contractors must offer comparable pensions.

Pensions for transferred staff would be on a money purchase basis, where staff receive as much as they and their employer have paid in. Currently, firms are obliged to provide a pension based on the final salary, as in the local government pension scheme.

Mr Rose said some staff could gain under this arrangement, but that companies would make a saving in most cases. Salary costs average 60% of expenditure. A reduction in company pay bills would allow them to undercut in-house bids.

'There would be a substantial saving for employers, therefore for the client - we could reduce contract prices quite considerably,' said Mr Rose.

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