07 / 5 / 2015 Midnight
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The original Fair Deal policy was first introduced in 1999 and was designed to protect the pensions of staff transferred out of the public sector on a compulsory transfer. Fair Deal required that compulsorily transferred staff received access to an occupational pension scheme broadly comparable to the public service pension scheme they were leaving.
The Independent Public Service Pensions Commission (in 2011) found that the Fair Deal policy was a barrier to Independent Providers (IP’s) offering public services because the costs to the receiving employer of providing a broadly comparable pension scheme were higher than equivalent public sector pension scheme employer costs. Fair Deal was reformed following a government announcement in July 2012 and subsequent guidance was published by HM Treasury in October 2013. The revised policy is known as New Fair Deal.
New Fair Deal replaces the requirement for the receiving employer to offer a broadly comparable pension scheme with transferred staff being able to retain membership of (or eligibility for) their public sector pension scheme. This applies to compulsory transfers from the public sector to the private sector.
The NHS Staff Passport Group (SPG) undertook a review of access to the NHS Pension Scheme for employees of IP’s carrying out NHS work. The SPG recommended to Ministers that the pension scheme be opened up to IP’s of NHS clinical services. The arrangements came into force on 1 April 2014. The difference between New Fair Deal and Access is that a transfer of staff does not have to take place under Access.
In order to access the pension scheme, IP’s must provide NHS clinical services under an NHS standard or Alternative Primary Medical Services (APMS) contract, or a public health related local authority contract. It includes services procured under ‘any qualified provider’ and covers both clinical and non-clinical staff delivering the clinical service.
IP’s wishing to have access to the pension scheme need to apply to NHS Pensions, the scheme administrator, for employing authority status, to commence from a future date. Under Access arrangements, IP’s can choose from three levels of access, the first being to comply with the requirements of New Fair Deal for staff who are compulsorily transferred into their organisation, the other two are:
- Level Two - Closed IP employer access, for staff with previous entitlement to join the pension scheme within 12 months of joining the IP
- Level Three - Open IP employer access – for all of an IP’s eligible employees
Levels two and three will apply to all the IP's staff working on NHS contracts for clinical services for more than 50% of their time.
Competition from IP’s
Offering access to the NHS Pension Scheme through New Fair Deal or Access is likely to reduce costs for IP’s versus providing access to a broadly comparable pension scheme. This will create a fairer pensions playing field by opening the pension scheme to all employers engaged in providing NHS clinical services.
Secondment to IP’s
From April 2017 arrangements under which NHS employers can currently retain pension scheme membership for staff by seconding them to a non-NHS organisation will end if those staff could now become scheme members under Access arrangements.
There are potential risks to the pension scheme and the taxpayer of widening access to the pension scheme. HM Treasury have put in place a number of control mechanisms for new IP access to the pension scheme including a threshold for overall pensionable pay, the ‘wholly or mainly’ criteria for employees, interest charges for late payment of contributions, spot audits and final pensionable pay cap (for members of the 1995 section).
Further information and resources on New Fair Deal and Access are available from the SPG website.
DH issued guidance in March 2014 entitled Fair Deal for staff pensions: staff transfers from central government DH Guidance for the NHS Pension Scheme. This guidance provides further clarity to contracting authorities, bidders and providers on the application of New Fair Deal.
DH worked with the SPG to produce specific guidance for the pension scheme. Reform of the Fair Deal Policy Guidance and Access to the NHS Pension Scheme, both published in May 2014.
The Government response to the consultation NHS Pension Scheme (Amendment) Regulations 2014 published in March 2014 includes information on the Access Review, responses to the consultation on new IP access proposals.
NHS Pensions have further information about applying for access to the NHS Pension Scheme on their website.