Council-employed social care workers outsourced to the private and voluntary sectors may lose out on pension settlements under plans outlined by the Treasury.
The government has proposed reforming or scrapping the Fair Deal policy in a bid to deliver value for money for taxpayers and to open up public services to competition.
The scheme ensures public sector employees receive a “broadly comparable” pension when they are compulsorily transferred to social enterprises and other parts of the private and voluntary sector under the Transfer of Undertakings (Protection of Employment) Regulations, known as Tupe.
But most private and voluntary sector employers struggle to match public sector pension schemes.
Local authority social workers are on the local government pension scheme. They contribute between 5.5% and 7.5% of their salary into pensions, with employers covering about 14% of the overall pay bill.
But public and private sector employers use different bases for calculating accruing pension liabilities. This makes the system “significantly more expensive and risky” for private sector employers, according to a report by the Independent Public Service Pensions Commission in October 2010.
The commission found the Fair Deal policy created a barrier to non-public sector providers, making it more difficult to achieve efficiencies and innovation.
Unions responded warily to the consultation launch, warning ministers not to attack pension provisions for “ordinary working people”.
Dave Prentis, general secretary of Unison, said diluting the Fair Deal policy would leave Tupe-transferred staff “at the mercy of private contractors”.
He said: “The government’s clear political agenda is to privatise more and more public services.
“They should not use this consultation to sweeten the deal for private companies bidding to take over public services.”
His concerns were echoed by Gail Cartmail, assistant general secretary of Unite, who said: “Our members will see the consultation as the coalition government lining up another attack against decent pension provision for ordinary working people.”
But Lance Gardener, who has been appointed chief executive of Care Plus, the social enterprise that will be providing adult social care and community health in North East Lincolnshire, supports a change to the Fair Deal policy.
He said: “With the local government pension scheme deficit, employer and employee contributions will have to rise.
“[The system] needs to change beyond all recognition for it to become affordable.”
The consultation closes on 15 June and the government will produce a report in the summer.
Meanwhile Lord Hutton is expected to publish his final report on the future of public sector pensions later this week. Last year the former cabinet minister outlined plans to raise employee contributions in order to save taxpayers’ money in an interim report.
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