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

102. Under existing rules, when members enter into shared cost additional pension contribution (APC) or shared cost additional voluntary contribution (AVC) agreements, those agreements end when that member moves to a new employer, including in cases of compulsory transfers. The government recognises that this disrupts the continuity of pension arrangements for affected members and is seeking views on how such agreements should be handled in the future. 

103. One option is that any subsequent relevant contractor should be required to honour the original agreement. This would simplify pension arrangements for the protected transferee and ensure that pension arrangements are unaffected by any outsourcing of the contract they are working on. It would, however, complicate decisions to outsource contracts as potential new relevant contractors would have to include considerations of any such arrangements in their decision to take on those contracts. This is the government’s preferred option, to best protect the rights of working members. 

 104. A second option would be that the initial agreement is only binding on the relevant contractor it is made with, or, in the case of lost pension, the contractor at the time the pension loss occurred and who would otherwise be responsible for meeting the obligation. This would have the benefit of simplifying outsourcing for relevant contractors, whilst impacting the pension arrangements of protected transferees who have no say in whether the contract they are working on is outsourced. 

105. A third option is that the responsibilities of the original relevant contractor would be taken on by the Fair Deal employer, allowing the pension arrangements of the protected transferee and the outsourcing process to be unaffected, but at cost of the relevant contractor that made the original agreement. 

Figure 2 - Options for continuation of previous agreements between PT and RC