Local government outsourcing—the pension issues
Produced in partnership with Gary Delderfield of Eversheds Sutherland (International) LLP
Local government outsourcing—the pension issues

The following Pensions guidance note Produced in partnership with Gary Delderfield of Eversheds Sutherland (International) LLP provides comprehensive and up to date legal information covering:

  • Local government outsourcing—the pension issues
  • The Best Value Direction
  • Application of Old Fair Deal before 1 October 2007
  • Who does the Best Value Direction apply to?
  • When does the Best Value Direction apply?
  • Enforcing the Best Value Direction
  • Assessment of pension protection
  • Prospective replacement of the Best Value Direction with Fair Deal 2013
  • Local authority contracts and treatment of new recruits

The Best Value Direction

The government’s ‘Fair Deal’ policy was first introduced in 1999 and set out how pensions issues should be dealt with when staff are compulsorily transferred from the public sector to independent providers delivering public services. Under the original Fair Deal guidance (Old Fair Deal), transferred staff had to be given access to a scheme certified as being ‘broadly comparable’ to their previous public service pension scheme.

Following a ‘best value’ review carried out in October 2001 by local government, a package of measures was announced in March 2002 to improve the quality of local services while ensuring fair treatment for employees working on local authority contracts. This included a commitment to tackle the fact that Old Fair Deal was not binding on local government. For more information, see: Application of Old Fair Deal before 1 October 2007, below.

The Local Government Act 2003 (LGA 2003) included statutory provisions requiring a best value authority, when contracting for the provision of services, to deal (among other things) with matters affecting the arrangements for the pensions of the transferring staff in accordance with directions issued under the Act. Draft directions were issued in May 2004 and June 2005, but things then went quiet until the sudden issue of the finalised Best Value Authorities Staff Transfers (Pensions) Direction (the Best Value