Council staff transferred to other employers will be able to stay in the Local Government Pension Scheme (LGPS) under government proposals which could make it easier for smaller organisations to bid for contracts.
Local government minister Rishi Sunak is consulting until 4 April on removing the option for employers to offer transferring staff a pension scheme ‘broadly comparable’ with the LGPS.
This would mean they would all have the right to stay in the LGPS, even if their work were transferred again in future, so long as they remained “wholly or mainly employed on the delivery of the service or function transferred”.
Mr Sunak said: “Staff who have no choice in the transfer of their role will, under these plans, have the peace of mind that despite their change in employer they will remain in the Local Government Pension Scheme retaining their full membership and benefits.”
He also proposed reforms to risk sharing between the LGPS and employers outside local government to limit the latter’s liability.
The consultation document said: “We are aware that for small and medium service providers in particular, pensions risk is a significant barrier, and can mean they do not bid for contracts they otherwise would, because they cannot bear the risk of significant contribution rate increases or of the risk of a large exit payment being required at the end of the contract.”
Reforming this would allow a potentially wider range of bidders for council contracts since they would not have to build in substantial risk premiums to their bids and so might offer better value, the consultation said.