Protection if you are contracted-out?
Under the last Government considerable
protection was established and developed for public service workers
whose jobs were contracted-out. This was based around the principle
that comparable pensions would be maintained.
In some cases, especially in local government,
new employers were allowed to participate in public service scheme,
so members were able to retain their membership.
More commonly, under ‘Fair Deal’ provisions
contractors were required to offer a comparable type and quality of
pension scheme. Schemes offered had to be certified by the
Government Actuary’s department as meeting the required standard.
This protect was extended to cover secondary transfers when
contracts were re-tendered.
The framework was far from perfect but did
offer employees a considerable degree of protection against pension
loss and meant that contractors could not win contracts by removing
pension rights.
One problem with this system was that it
generally would cost contractors more to provide the required
levels of pension than it would the public service scheme. The
solution Unite would support would be to allow greater
participation of contractors in public service schemes in respect
of their employees performing public service work. This would also
be the preferred solution of many contractors.
The Government’s initial stance on this was
that these provisions constitute a barrier to the greater plurality
of public services and they are considering removing them all as a
way of encouraging a greater degree of privatisation. This is at
the same time as they are planning a huge expansion in the ‘Big
Society’ and changes which might involve, for example, large groups
of health workers being transferred to private employers.
The Government has already acted to remove
requirements in respect of new staff, as distinct from transferred
staff, taken on by contractors (by abolishing the ‘Two tier
code’).
The current protection was largely based on
policy rather than legislation. If it is removed the only
protection would be the very limited legal protection provided for
pensions under the TUPE legislation. This would oblige a private
sector employer after a transfer to offer employees only a defined
contribution pension scheme in which they match 1:1 any employee
contribution up to 6% of basic pay.
A consultation document was issued in March
2011 and the Union has responded.
At the end of the consultation the Government
indicated that the outcome would depend on the wider reform of
public service pensions. Its position is that now if reforms are
agreed then it will maintain Fair Deal and consider widening access
to the public service schemes to those contracted-out of public
service employment.
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