FAQs – Pensions aspects of compulsory transfers of employment
Section C – Transfers out of the Civil Service
Q1. What do we need to do about pensions?
A1. Note that the June 2004 HM Treasury Guidance Note requires any
procurement in relation to a business transfer to include bulk transfer
terms and made available to all qualified bidders. It is therefore vital
that you take actuarial advice to inform your business case. See sections
6.5 and 12 of the Employers Pension Guide. The actuaries will charge you
for their services.
Q2. Can staff leaving the Civil Service remain in PCSPS?
A2. Not unless the new employer is admitted to Schedule 1 of the
Superannuation Act 1972. You can check this by contacting CSPD or checking
on our website.
Q3. How should we keep staff informed?
A3. Staff and their representatives should be fully involved in
consultations about the process and this typically requires careful
handling when covering pensions issues.
Q4. What compensation terms are staff entitled to if they are made
redundant by the new employer?
A4. In general, TUPE protects an individual’s conditions of employment on
transfer, including redundancy terms. Although TUPE excludes pension rights
(see A Q1), in the light of ECJ judgements (the Beckmann and the Martin
cases) you are advised to seek legal advice on the extent of this
exception.
Redundancy compensation must be based on the total length of service with
both the Civil Service and the new employer. This is irrespective of
whether or not the individual has transferred their PCSPS benefits to the
new employer’s pension scheme. The new employer is responsible for the
payment of appropriate compensation to staff and you should ensure that
they are aware of the terms of the CSCS at the time of the transfer of
employment as these are the individual’s TUPE-protected terms.
Q5. Will the PCSPS seek to agree payment of sufficient funds to provide
year-for-year service in the new employer’s scheme?
A5. Yes. You must commission HBW to provide acceptable terms to be included
in the procurement package and handle the transfer of funds. You must meet
HBW’s costs. PCSPS pays the cost of the bulk transfer.
Q6. What are the options for staff who were contributing to the CSAVC
scheme?
A6. Irrespective of whether staff choose to transfer their PCSPS benefits
to the new scheme, they may:
-
transfer their CSAVCs to the AVC scheme of the new employer; or
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transfer their CSAVCs to a FSAVC scheme of which they are an active
member; or
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preserve their CSAVCs.
Q7. What are the options for someone being transferred out of the Civil
Service who has a preserved PCSPS award as well as being an active PCSPS
member?
A7. If the individual is a member of classic, at the time of their transfer
of employment they must be given the option to either aggregate their two
periods of service, or to treat them separately. If they are a member of
classic plus or premium, they must make that decision within 12 months of
the re-employment (or at the time they are transferred if this is earlier).
If they choose to aggregate they may then either:
-
transfer their PCSPS benefits to the new employer’s scheme; or
-
preserve their PCSPS benefits.
If they choose not to aggregate they may either:
-
transfer both awards to the new employer’s scheme. If they do so, only
their current period of PCSPS service will be eligible for bulk transfer
terms. The preserved award will be transferred on a CETV basis; or
-
transfer their current PCSPS service to the new employer’s scheme on bulk
transfer terms and the preserved award to another arrangement which will
accept it on CETV terms.
They may not preserve one award in PCSPS and transfer out the other.
Q8. When should staff be given a choice of what to do with their PCSPS
benefits?
A8. There are several reasons why staff must be given a choice of what to
do with their PCSPS benefits as soon as possible after the transfer of
employment.
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It is an implicit requirement of the SoP.
-
Staff could be severely financially disadvantaged by any delay in the
process. For instance, if a PCSPS pension becomes due for payment after
an individual has been transferred, but before they have had an
opportunity to transfer their benefits, they may claim their PCSPS
pension. But, as a result, they forfeit their right to participate in the
bulk transfer. However, if they choose to wait for the bulk transfer
option, they will be denied a pension which is due to them. This conflict
can create both severe administrative problems for the employer and
financial consequences for the individual.
-
It increases the likelihood of staff leaving the new employer without
having the opportunity to transfer their PCSPS benefits. This can produce
administrative difficulties.
-
It can lead to complaints from members and their trades unions.
It is your responsibility to ensure that the options exercise and
associated communications with staff takes place. Your APAC will assist
with the options exercise and you can commission either GAD, HBW or another
appropriate organisation to help with the communications aspects.
Q9. Can an individual who is aged 60 or over at the point of transfer opt
to transfer their PCSPS benefits to the new employer’s scheme?
A9. Yes (provided the scheme will accept those benefits). If they choose
not to transfer their PCSPS benefits, those benefits will come into
payment. If the new employer is also within the public services,
‘inter-service’ abatement would not be applied.
Q10. If a member of the group of staff to be transferred is not transferred
with the remainder of the group, eg they have been called-out for service
in the Armed Forces, or if there is an Employment Tribunal reference
pending, can they still participate in the bulk transfer?
A10. No. If the individual remains a civil servant for whatever reason,
they are not transferred to the new employer with the rest of the group. If
they are transferred at a later date, a different bulk transfer agreement
will apply.
Q11. Can an individual who left the new employer before the bulk transfer
exercise starts still be included in the options exercise?
A11. Yes. But see A8 iii above.
Q12. Do staff have to complete a medical questionnaire to be admitted to
the new employer’s scheme?
A12. No. Automatic entry to the new employer’s pension scheme is a
requirement of broad comparability.
Q13. What about an individual who is a member of the Partnership Pension
Account rather than PCSPS?
A13. They may join the new employer’s scheme but are not entitled to a bulk
transfer of their Partnership benefits. They should be advised that they
may retain membership of their Partnership account but that the Civil
Service employer will make no further contributions. If they are paying
their own contributions through payroll and wish to continue contributing,
they should be advised to make arrangements either with the new employer or
with their bank. They should also advise the provider that they are
changing employer.
Q14. I’ve heard about issues surrounding ‘the two tier workforce’. What is
this?
A14. This describes the situation when public sector work is outsourced,
staff are transferred on TUPE terms and the contractor subsequently engages
new staff on lesser terms. The Cabinet Office has introduced a Code of
Practice to address this situation. See:
Any queries on this particular issue should be addressed to Phillip Jones:
Any queries on the above should be raised through the CSP Employer’s
Helpdesk:
