Staff lose out on pension under contractor transfer

Thousands of public-sector employees could lose out on the chance to remain
in the generous local government pension scheme (LGPS) when transferred out to
contractors.

In a major deal between the DETR, authorities and unions signed last year,
staff whose employment was taken over by a private contractor were to be
allowed to remain in the LGPS.

The regulations state that it applies only to Best Value authorities. But
experts warn that legal opinion has suggested this could exclude LEA schools,
further and higher education organisations and the Environment Agency.
Authorities which provide services to external agencies, such as water
companies, whose staff are then transferred to work for those agencies are also
not covered.

In one case alone involving the £4bn West Midlands pension fund and water
company Severn Trent, about 500 employees will not be covered.

The fund’s pensions manager Mike Woodall said that the confusion over
pension rights have created problems for the personnel department as
transferring staff were refusing to sign contracts until the issue was
resolved.

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"The number of people affected could run into the thousands. I think
there are still problem areas to emerge."

But Local Government Pension Committee head Terry Edwards said it is likely
that the DETR will put through amendments to extend the agreement’s coverage.