Local Government Pensions Scheme in England and Wales - Scheme Improvements (Access and Protections)

64. As the government now intends to introduce the strengthened Fair Deal protections in the LGPS, it is proposed that for future outsourcing exercises all service providers would be required to provide transferred staff with continued access to the LGPS rather than a broadly comparable scheme, other than in exceptional circumstances (set out in “Exceptional arrangements – continuation of broadly comparable schemes”).  

65. This would strengthen existing protections significantly. Protected employees would have increased confidence and security in knowing that, despite their transfer, they would retain a right to all the benefits that come with membership of the LGPS, not least that it is a statutory scheme with benefits set out in law. Moreover, so long as the protected employees continue to work wholly or mainly on the activities which are being carried out by the service provider on the Fair Deal employer’s behalf, they would continue to have that protection even if the service is retendered or transferred again. 

66. The removal of broadly comparable schemes as an option, other than in exceptional circumstances, is in line with the adoption of the 2013 Fair Deal guidance by other central government schemes and would also simplify pension requirements for outsourcing bodies and service providers. The Treasury’s update to Fair Deal guidance in 2013 removed the option of broadly comparable schemes in response to the Interim Report (13) from the Independent Public Service Pension Commission, which found that offering a broadly comparable scheme can be a significant barrier for service providers considering bidding for government contracts because of the high cost and risk levels involved.  

67. The scale of the barrier of broadly comparable schemes in the LGPS is unknown, partly because most service providers involved in local government outsourcings have avoided the cost and risk of offering a broadly comparable scheme by applying to join the LGPS as an admission body via an admission agreement. However, the Government Actuary’s Department is aware of two broadly comparable schemes (Mercer DB Master Trust and the Dolce Limited Retirement Benefits Scheme) providing benefits to active members who have been outsourced under contract from local government. These had an estimated total of around 230 members in September 2024 with some members currently accruing benefits. Therefore, removing the option for broadly comparable schemes to be offered in the future should mean that pension requirements are simplified for service providers and all outsourced local government workers eligible for Fair Deal protection will have access to the LGPS, rather than a broadly comparable scheme.  

68. The government is aware that there may be other broadly comparable schemes and is seeking further details on these schemes, to better understand any potential impact of the proposals in this consultation.