The NHS Pensions Agency has recently confirmed that NHS staff who are outsourced to private sector organisations will be able to continue with their existing NHS pension entitlements.  The Government has been committed to making such a change since July 2012 when Danny Alexander, the Chief Secretary to the Treasury, announced that the policy would be introduced, but further details up until now have been thin on the ground.

The cost of having to fund transferring employees' pension entitlement has long been seen as a significant deterrent to private organisations bidding for NHS contracts, since the 'Fair Deal' policy meant that outsourced staff continued to be eligible for comparable pension benefits when they transferred across to their new employer. As a result of the changes confirmed by the NHS Pensions Agency, private sector employers will be able to pay into the existing NHS pension scheme in relation to the transferring employees, rather than providing comparable schemes themselves.  This will still mean pension contributions equivalent to 14% of the employee's salary but would represent a considerable reduction on the 25% contributions that some private providers have been making to ensure that broadly comparable benefits are in place.

Whilst private sector providers into the NHS are likely to welcome the changes, a degree of uncertainty remains as the formal implementation date has yet to be announced and the actual wording of the policy is still unclear.  The Government has also yet to confirm whether the change will only effect those employees who subsequently transfer from the NHS or whether those employees who have already transferred will also be covered.  Given these outstanding questions it may be a matter of withholding final judgment for the time being until the exact details of the policy are published.