NHS staff transferred to private sector will keep pensions

With immediate effect any worker will remain a member of the NHS Pension Scheme if they were transferred out of the health service to a private provider under transfer of undertakings, protection of employment (TUPE) regulations.

These workers will also remain members of the scheme if their service is subsequently transferred to another provider. Non-members transferred out of the NHS will retain their right to join it at a later date.

The changes appeared in Treasury guidance on the Fair Deal pensions policy which emerged last week. They reflect the government’s aim to widen access to the pension scheme, which was first mooted in the 2010 comprehensive spending review.

It means the government will effectively guarantee the pensions of privately employed staff delivering NHS funded work, as it already does existing NHS employees. The plans will also boost contributions to the pension scheme as more providers enter it, making it more stable.

The Treasury said in a statement: “The new approach will ensure staff compulsorily transferred out of the public sector will continue to have access to good quality pensions.

“The new Fair Deal policy will achieve better taxpayer value for money by removing the requirement for contractors to provide costly private sector pensions. Lifting this requirement should also generate more bids for the provision of public service contracts which will drive efficiencies and innovations.”

The Treasury and Department of Health are still deciding whether to grant access to the NHS pension for any private sector employer whose staff deliver NHS funded clinical services – if they have previously worked in the NHS or not. A final decision is expected from ministers “within months”, according to a Treasury source.

HSJ understands health unions have unanimously backed extending access to the pension scheme.

Such an extension would remove one of the biggest obstacles to private providers when competing against NHS providers.

Under previous pension rules a private provider bidding for NHS contracts was required to offer a “broadly comparable” pension to that offered to NHS staff.

But matching the effects of a taxpayer subsidy and overall government guarantee is expensive. The Hutton report on public sector pensions estimated it to cost private providers the equivalent of a 40 per cent contribution rate, when their NHS counterparts contributed just 14 per cent.

David Worskett, chief executive of the NHS Partners Network, which represents private providers, said making the change would remove a “disbenefit” for private providers. “You have not got a level playing field at the moment,” he added.

Jon Restell, chief executive of Managers in Partnership and co-chair of the review into widening access, said private companies would have the option to offer employees access to the NHS pension rather than it being an individual right.

“If you can protect or maintain the pay terms and conditions, including pensions, people are much more likely to feel confident moving around a multiple provider system,” he said. “This is a way of maintaining the stability of the pension scheme and its membership.”

Barrie Brown, national health officer with Unite, said: “Quite clearly we are going to see far more providers and people will be in the NHS one year and with a different provider the next. Five years after that they could be back with the NHS again.

“As long as we are facing that situation, widening access to the pension scheme is important for our members.”