On 16 June 2009 the CBI published its report A question of balance: reforming pensions practice in public services contracting.
The CBI’s objectives were to:
- consider the efficiency of the provision of public sector pensions (funded v unfunded arrangements);
- highlight the perceived disadvantages for private sector entities when bidding for public sector outsourcing contracts; and
- propose a means of “solving the problem”.
The report proposed a number of changes to public sector pensions, particularly unfunded pay-as-you-go schemes, such as those found in the NHS, civil service, school teaching and the uniformed services. The report’s key proposal was that all public sector employees transferred to the private sector should be able to retain membership of the pension scheme of their original public sector employer. The CBI proposed the introduction of the concept of a “Public Sector Participating Employer”, whereby the new private sector employer would meet the cost of employer contributions to the relevant public sector pension scheme. Essentially, this mirrors the concept of “Admitted Body Status” operated by the Local Government Pension Scheme.
Whilst the approach proposed by the CBI ought to offer benefits to the public sector (the CBI suggests that private sector employers will be able to ensure best value for contracting public sector entities in exchange for the cost certainty that “Public Sector Participating Employer” status would afford them), it is apparent that such an approach would represent a substantial shift in government policy, with the public sector unable to transfer significant risk to the private sector together with the relevant transferring employees (as is currently the case).