Pensions blow for professionals who move to private sector

Social workers who set up independent practices or social care staff who work for outsourced services may be barred from receiving pensions comparable to those in local government.

The review of public sector pensions released by Lord Hutton last week said their continued membership of the Local Government Pension Scheme (LGPS) represented a long-term financial risk to the government and taxpayers.

A quarter of the members of the LGPS are not council staff, according to Brian Strutton, the GMB union’s national secretary for public services and a member of the LGPS policy review group.

He said Hutton’s proposal would have a major impact on local authority workers who transfer to arm’s-length, private sector and voluntary sector organisations under government plans to outsource more services under the Big Society banner.

Hutton made his proposal despite a claim from the Local Government Association – in its submission to the review – that such a change could cause industrial relations problems when councils outsourced services.

He published his review days after the Treasury suggested reforming or scrapping the Fair Deal policy. This guarantees 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.

This followed a finding in Hutton’s interim report last October that Fair Deal hindered non-public sector providers because it could be “significantly more expensive and risky” for them to provide pensions comparable to those in the public sector.

Andrew Cozens, strategic adviser for children, adults and health services at Local Government Improvement and Development, said a change in pension terms was “a general risk to all social enterprises floated off from local or central government including the NHS”, though it would take time to implement the proposals.

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