Changes to government requirement of the treatment of public sector schemes have meant that, in general, non-government entities that employ public sector and ex-public sector employees must be allowed to join the public sector pension scheme, including outsourcers. There is, as a result, some tension as to the contributions demanded from such employers. Recently, the Deputy Pensions Ombudsman (the ‘DPO‘) held that an approach adopted by East Riding (the administering authority of the pension fund in question) was valid when it required the newly-established Thomas Ferrens Academy to make prospective employer contributions at a rate of 43.4%.

The DPO concluded that East Riding had acted within its legal powers and in accordance with actuarial advice and that the Academy’s complaint, that the contribution rate was excessive and unlawful, could therefore not be upheld. In coming to her conclusion, the DPO noted that East Riding owed a duty to the members and to the participating employers as a whole (not to the Academy in isolation) to adopt a policy “which it considers to be fair and reasonable”. The decision underlines the difficulty in challenging contributions demanded by an administering authority to a public sector scheme.