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Barnett Waddingham
0333 11 11 222
Our team can lend their experience and expertise in an area of pensions where one size definitely does not fit all.

Pensions are expensive. If you take on staff as part of an outsourcing arrangement, from either the private or public sector, you may be responsible for some or all of employees’ historic pension promises. As a result, unexpected costs from these benefits could exceed any other margins in the contract price. It is therefore vital to make sufficient allowance for them in a contract tender to avoid exposing your business to substantial financial risks. We can help forecast and manage these costs by providing advice on:

  • pension risks involved in an outsourcing contract
  • allowances to include in contracts for pensions costs
  • negotiation of bulk transfer terms
  • analysis and modelling of future pensions costs

Even if you are only providing defined contribution pensions (which don’t usually create significant risks for the employer), there may be potential complications around redundancy costs (for example Beckmann costs for staff transferred under Transfer of Undertakings [Protection of Employment] - TUPE).

LGPS

Outsourcing arrangements in connection with the LGPS are shaped to a large extent by the fund actuary. However, there can be significant value in taking separate actuarial advice. In particular, Barnett Waddingham’s commercial focus can help to improve the financial outcomes for contractors in many circumstances.

Some specific areas of advice that we provide to contractors in relation to the LGPS Admitted Body framework include:

  • understanding the implications of admission agreements
  • negotiating terms to sit alongside admission agreements
  • negotiating termination deficits at the point of exit
  • advice in relation to potential redundancy or early retirement costs
  • help in obtaining and maintaining GAD passports, or alternatively certifying broadly comparable schemes directly.

New Fair Deal guidance

Below are three bite-sized talks about the New Fair Deal guidance, which protects public sector employees’ pensions rights when their employment transfers to a new company.

This new guidance is intended to make it much easier for companies to outsource work from the public sector, reducing the financial impact of providing public sector-like pensions to employees who transfer.

This is really good news for all parties involved in outsourcing, but there are a number of things to watch out for when bidding for these contracts.

New Fair Deal

View the full series of our New Fair Deal guidance videos

Related knowledge and resources

Blogs

  • Picture for Navigating the endgame
    Navigating the endgame

    TPR has recently increased its focus on the endgame of UK DB pension schemes. This blog explores how companies paying higher dividends than deficit contributions should expect more of a challenge on this from their trustees and The Pensions Regulator.

  • Picture for Helping members understand their transfer options
    Helping members understand their transfer options

    Transferring from a DB scheme is a major decision for members and there are many factors that should be taken into account. Simon Taylor offers advice to these members to understand their transfer options.

  • Picture for The latest mortality research and its impact on the 2019 valuations - is it all plain sailing?
    The latest mortality research and its impact on the 2019 valuations - is it all plain sailing?

    The assumptions that need to be made as part of the LGPS valuation process are varied and many. For example, what investment returns will the Fund achieve in future? What are members going to be earning? How long will they live?

  • Planning for your DB pension endgame

    TPR has recently increased its focus on the endgame of UK DB pension schemes. This briefing note explores how companies paying higher dividends than deficit contributions should expect more of a challenge on this from their trustees and the Regulator.

  • The DB pension transfer process

    Transferring from a DB scheme is a major decision for members and there are many factors that should be taken into account. Simon Taylor, Partner offers advice to these members to understand their transfer options.

  • Cost management in the LGPS and the 2019 valuation outlook

    A look at the cost management process for the LGPS and how this might affect administering authorities, employers and members.

  • Negotiating a termination deficit with an LGPS fund

    This case study highlights a number of issues for employers who are Admission Bodies in the LGPS, including managing deficit predictions and understanding how assets within the pension fund are allocated.

  • Negotiating better contract terms in the public sector

    Our client was a public sector body with its own LGPS fund, who required us to negotiate better contract terms for the bidders. It demonstrates the benefit of the commercial focus we can bring to the public sector arena.

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