Public Sector Outsourcing – Update

On 10 March 2011 the Independent Public Service Pensions Commission (the "Hutton Commission") led by Lord Hutton published its final report on pension provision for public sector employees. Key amongst the report's suggested reforms was the recommended move from final salary schemes to career average schemes whilst retaining the link to defined benefits.

At first glance the Hutton Commission's proposals would not seem to have much effect on private contractors but read on to find out why this is not necessarily the case.

Existing protection for transferring public-sector employees 

• Fair Deal 1999 & 2004

Back in 1999 the Labour Government introduced the non-statutory Fair Deal Policy (the "FDP") setting out the way it wanted outsourcing public-sector bodies to deal with pensions of staff transferring to private-sector employment. Fair Deal 2004 supplements the FDP but not to any material degree. FDP requires that the transferring employees acquire