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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).


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


  • Picture for Tier 3 employers in the LGPS: 102 pages in two minutes!
    Tier 3 employers in the LGPS: 102 pages in two minutes!

    Aon released their report commissioned by the Scheme Advisory Board, identifying potential issues surrounding the participation of Tier 3 employers in the LGPS. We’ve set out some of the key issues and findings.

  • Picture for LGPS Annual Report 2017: highlights for fund actuaries
    LGPS Annual Report 2017: highlights for fund actuaries

    The LGPS SAB released their latest report on 22 May, providing information on the status of the LGPS for its members, employers and any other bodies. We’ve shared key things for fund actuaries in the lead up to the 2019 valuation.

  • Picture for Scottish LGPS structure review: considerations and consequences
    Scottish LGPS structure review: considerations and consequences

    Louise Lau, Actuary, provides some initial thoughts around the options put forward in the Scottish LGPS structure consultation and asks: what are some of the considerations to be had and what would be the potential consequences of such changes?

  • LGPS (Amendment) Regulations 2018: examining exit credits

    The new LGPS (Amendment) Regulations 2018 finally emerged on 19 April 2018, and came into force on 14 May 2018. We discuss the arising issues that administering authorities should consider with regard to exit credits.

  • Pass-through arrangements

    Our latest note outlines some of the considerations that should be taken if a new employer becomes an admission body within an LGPS Fund under a pass-through arrangement. Read the note to find out more.

  • An introduction to the new Fair Deal

    The new Fair Deal guidance, effective from October 2013, removed substantial barriers that previously prevented many firms from competing for public sector contracts.

  • 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.

  • Further support for Crisis at Christmas

    A raffle held at the Barnett Waddingham staff Christmas party has helped to raise additional financial support for Crisis at Christmas – the charity that aims to end homelessness and help change people’s lives for the better.

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