Transfer of staff
These pages are for employer use only. Member information can be found on the home page.
This section is designed to give you a brief overview of outsourcing as it relates to pension arrangements and to the LGPS. Outsourcing members is a complex legal process largely governed by Transfer of Undertakings (Protection of Employment) Regulations 2006, the Local Government Pension Scheme Regulations, and government directions and guidance. HR and payroll staff involved in an outsourcing exercise should refer any questions on how to proceed to your manager who is expected to be familiar with the relevant legislation.
The Best Value Authorities Staff Transfers (Pensions) Direction 2007 states that a ‘Best Value Authority’ is legally required to make sure that transferring employees are offered either continuing membership of the Local Government Pension Scheme or a ‘broadly comparable’ pension scheme if their employment is transferred under TUPE to another employer. A ‘best value authority’ (under the Local Government Act 1999) includes local authorities such as district and parish councils), and police, fire and waste authorities. The Secretary of State can order that levying and precepting bodies under the Local Government Finance Acts) are also best value authorities.
Other public sector employers (e.g. organisations funded by the state) which are not best value authorities, should follow the guidance in the Cabinet Office’s ‘Staff Transfers in the Public Sector’ document which states that TUPE terms ought to apply (even if they don’t have to legally), that there should be ‘appropriate terms’ to protect occupational pensions, and that ministers expect public sector employers to adopt the policy set out in HM Treasury’s ‘A Fair Deal for Staff Pensions’ (i.e. offering continuing membership of the LGPS or transferring to a ‘broadly comparable’ scheme).
The outsourcing scheme employer should make sure the organisation to which staff are being transferred, either becomes a transferee admission body of the Shropshire County Pension Fund, in which case that organisation would become the new scheme employer of the transferred staff. Or offer the staff membership of a pension scheme which is ‘broadly comparable’ to or better than the LGPS.
As outlined in HM Treasury’s ‘A Fair Deal for Staff Pensions’ a best value authority or other public sector employer must consider pensions right at the start of an outsourcing exercise. Pensions are a fundamental part of the reward package an employer gives to its staff, so if a scheme employer doesn't include pension arrangements in a tender document, then a potential service provider to which staff will transfer under TUPE, won't be able to submit a realistic bid to provide the service.
How does a scheme employer find out the cost of providing scheme benefits for a group of employees?
How does an organisation to which staff will transfer join the LGPS?
Once staff have been transferred, can an outsourcing employer have any continuing liability towards the scheme?
Yes, at the end of the contract the original scheme employer will have to pay any outstanding liabilities owed to the Shropshire County Pension Fund if the contract is terminated prematurely For example if the organisation to which the staff transfer goes into liquidation, the original scheme employer will have to pay any outstanding liabilities owed to the fund which are not covered by a bond or paid by the transferee admission body.