HISTORIC PRESS RELEASE : Better Protection for Pensions in PFI – Alan Milburn Launches a new Five Point Action Plan [June 1999]

The press release issued by HM Treasury on 14 June 1999.

Staff transferring from Government Departments and Agencies to the private sector under PFI and other PPP deals are to have their pensions better protected through a new five point plan announced by Chief Secretary Alan Milburn today.

Launching the new five point plan Alan Milburn said that this was a major step forward in taking forward the Government’s PFI and PPP programmes and one that would guarantee fair treatment to employees.

Mr Milburn said:

“PFI has a key part to play in delivering the Government’s modernisation of public services. For it to work in giving value to the taxpayer it also needs to be trusted by the staff who deliver those services.

“In the past some staff have felt that their pensions have suffered when they have transferred from public to private sector employees. It is not fair or right that staff pensions should be a casualty in PFI deals.

“I want future PFI deals to guarantee fair treatment to employees. This new guidance protects staff pensions. In this way we can ensure that when private sector contractors are selected as partners in delivering services, the decisions are not distorted by handling of pension issues. It is fair to staff, employers and taxpayers alike.”

The Statement of Practice on the Treatment of Staff Pensions in Government PFI deals supercedes existing guidance on procurement practices through a new five point action plan:

• requiring business contracts to be conditional upon staff being offered ‘broadly comparable’ pension packages by the new employer in a way that guarantees that employees are no worse off when they move from the public sector;
• extending these rights for some public sector staff who may be subsequently transferred to another private sector employer or who are involved in integral sub-contracting;
• publishing a Statement of Practice of the Government Actuary’s Department on how ‘broad comparability’ will be assessed;
• making it a standard requirement before a business contract is signed for a new employer’s pension scheme to allow transferring staff the option of moving their accrued credits into that scheme on a fully protected basis;
• ensuring that business deals involving staff transfers will not be signed unless any unresolved employee concerns have been considered by the appropriate Departmental Minister.

The new procurement practices will be introduced immediately. This is without prejudice to the outcome of the Government’s current review of the coverage of the Transfer of Undertakings (Protection of Employment) – ‘TUPE’ – Regulations, which is expected to report later this year.

The new practices will be followed by Government Departments and Agencies. Alan Milburn said that he would be expecting other parts of the public sector to adopt them too, and would be expecting them to do so as quickly as possible.