Outsourcing/contracting out
9.1 Background and introduction
9.1.1 In recent years there has been a large increase in the number of scheme employers who have outsourced or contracted out some of their employees (who may also be members of the LGPS) to an employer that is not part of the Wiltshire Pension Fund.
9.1.2 Under LGPS Regulations, these transferred employees can not continue to be members of the LGPS without the new employer becoming an admitted body. We have a number of admitted bodies in the Wiltshire Fund as a result of such outsourcings. To facilitate such membership, it is necessary for there to be a three way admission agreement between the original scheme employer (“the transferee”), the new employer (“the transferor”) and the Fund.
9.1.3 In virtually all such cases, the TUPE (Transfer of Undertakings Protected Earnings) Regulations will apply, with the aim of protecting the employees’ terms and conditions, including pensions.
9.1.4 In relation to this protection, there are some further regulations known as “Fair Deal” which are guidance for all public sector organisations, but which are compulsory for “best value local authorities”. This is applicable to all transfers from the 1st October 2007 onwards. Such authorities within the Wiltshire Pension Fund after 1 April 2009 are Wiltshire Council, Swindon Borough Council, the Wiltshire Police Authority and the Wiltshire & Swindon Fire Authority.
9.1.5 "Fair Deal” requires that, for staff who are transferring and were either in or had a right to be in the LGPS, pension rights are protected by ensuring that the new employer can either offer a broadly comparable scheme as certified by an Actuary (in practice this is rare) or that the new employer becomes an admitted body of the LGPS, in this case the Wiltshire Pension Fund.
9.1.6 All employers who are not “best value local authorities” are recommended to protect transferee’s pensions by ensuring that the new employer offers either a broadly comparable scheme or becomes an admitted body.
9.2 What do you need to do?
9.2.1 It is essential that the Wiltshire Pension Fund is informed at the earliest possible opportunity of any potential transfers of staff (TUPE or otherwise), well before any commercial agreement affecting employee transfers is made between the scheme employer and the contractor.
9.2.2 This is important because the terms of the pension arrangements need to be factored into the tendering and procurement processes. This avoids substantial problems and commercial disputes arising. It also protects the interests of the staff concerned.
9.3 Further information
9.3.1 Guidance from the CLG surrounding admitted body status provisions.
9.3.2 We are currently developing “A guide to the admission process for new employers into the Wiltshire Pension Fund”, which will be equally useful for existing employers in explaining the issues and processes needed in relation to pensions in the event of outsourcing.
This should be developed by early 2010 but during the interim period, please contact Andy Cunningham for further information and assistance or telephone 01225 713612.
Wiltshire Pension Fund, Wiltshire Council - Bythesea Road,Trowbridge, Wiltshire, BA14 8JJ.
© 2009 Wiltshire Pension Fund.