On 4 July 2012, the coalition government issued a written Ministerial Statement in relation to public service pensions and the ongoing negotiations with the trade unions. At the end of the statement it was confirmed that, having reviewed “Fair Deal Policy” (meaning Annex A to the Cabinet Office State of Practice on Staff Transfers in the Public Sector 2000), the overall approach would be maintained but with one very significant proposal.

It is proposed that staff transferring out of the NHS (and other public sector employment) under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”) would be offered continued access to the NHS Pension Scheme rather than, as is currently the position, independent providers of NHS services having to provide a broadly comparable pension. At the moment those staff transferring from the NHS who continue to work on NHS Services have to be offered the opportunity to transfer from the NHS Pension Scheme to a pension which is certified by the Government Actuary Department as broadly comparable, if the independent provider is not otherwise able to participate in the NHS Pension Scheme. This also involves the thorny issue of negotiating bulk transfer agreements for the accrued benefits of the transferring staff.

The Ministerial Statement indicates that NHS staff who are compulsorily transferred from the public sector, including subsequent or second generation transfers from and to independent providers, will retain membership of the NHS Pension.Many believe that the removal of the requirement to provide a broadly comparable pension will open up the market to independent providers who have potentially been prohibited from joining the market, because they were unable to meet the costs of providing a broadly comparable pension.

Until we receive the coalition Government’s detailed proposal on this in the autumn there are still some unanswered questions, particularly in relation to ongoing procurement exercises, such as whether bids can be repriced once the revisions of the Fair Deal Policy have been confirmed. Therefore NHS Trusts should consider the implications of these potential changes in relation to ongoing projects.