Under TUPE transfer terms, the pension provision of the potential transferees must be considered by the letting Local Government Employer who is considering the outsourcing. You must contact the Pensions Manager as early as possible in the process, and you will be given all the details which you will need to proceed further.
For more detailed information please read the briefing note below:
Employers wishing to start the legal and financial process to allow a contracting employer to operate and administer the Leicestershire LGPS need to contact the Pension Section as early as possible as the entire process can take a few months.
In order to request the information that you need to proceed with the transfer, please complete and return one of these two enquiry forms. You may also find a copy of the template for a pass through admission agreement and a pass through bond. These are for reference only to show what will need to be agreed to when signing the documents. Once we have received the completed enquiry form, a draft version of the admission agreement and bond (if required) will be emailed out.
Reference to the briefing note and discussions between the letting employer and the bidding company (if one has already been selected) will help you decide which type of admission route you elect to take. Once theadmission route has been decided on, which will be either a ‘pass-through’ admission, or the method whereby the liabilities are transferred method, please send us the appropriate form to commence the administrative process.
Quick guide to differences between the types of admission available:
Please ensure that you have read the briefing note in full before coming to a decision. By way of a short guide of the main differences, this pass through grid will also help you:
Pass-through grid
| Scheme member | |
|---|---|
| Pooling pass-through | No difference, member stays in the LGPS. |
| Fixed contribution rate agreed pass-through | No difference, member stays in the LGPS. |
| Liabilities transferred to company method | No difference, member stays in the LGPS. |
| Letting employer | |
| Pooling pass-through | Easier process and employer rate known at outset without waiting for actuary. |
| Lower actuarial fees as no actuarial quote required. | |
| All bids can be priced on a similiar basis without factoring in pension 'extra' costs. | |
| Suits short term or smaller contracts. | |
| Could get a surplus at the end depending on funding performance. | |
| Possible cross subsidy as true rate is not being paid. | |
| Fixed contribution rate agreed pass-through | There will be an actuarial cost to calculate a bespoke rate. |
| Rate won't be immediately available. | |
| Liabilities transferred to company method | Hands responsibility for all future liabilities to company. |
| Company | |
| Pooling pass-though | Absolute certainty for the company of financial outlay - no 'nasty surprises'. |
| Not subject to volatile funding conditions. | |
| No termination valuation necessary. | |
| Fixed contribution rate agreed pass-through | Absolute certainty for the company of financial outlay - no 'nasty surprises'. |
| Not subject to volatile funding conditions. | |
| Rate won't be immediately available. | |
| No termination valuation necessary. | |
| Liabilities transferred to company method | Company usually pays a far higher employer rate that the letting employer's rate. |
| This could be factored into the price, possibly a disadvantage when compared to other bidders with comparable schemes already. | |
| Company responsible for future liabilities that won't be known until the end of the contract. | |
| Employer rates can vary more for companies between scheme valuations. | |
| Termination valuation at the end of the contract to pay for and possibly to settle, however, this will not be known until the end of the contract. | |
| A full bond will be required which can cause delays and may be difficult to obtain for some companies. |
All the legal documents and bond (if required) must be completed and all legal and financial obligations met, before the staff members move across.
If the TUPE transfer is between two employers already in the Leicestershire County Council Pension Fund
If the transfer is between two employers that both already operate the LGPS within the Leicestershire Fund (e.g. local councils, academies, some colleges) the process is much simpler and there are no further legal charges involved when small numbers of staff transfer over. This is because the members’ LGPS pensionable service will automatically resume with the new employer by right, their pension entitlement being unaffected by the change. Small numbers of transferring members will be dealt with internally by the Investments team who will switch the liability for their pensions from the ceding employer’s pension fund to the new employer’s pension fund. However larger numbers (more than 10) would have to go to the actuary for this to be done correctly, and there would be an actuarial charge of £750 plus VAT in this instance.
Employers are asked to alert the Pension Section at the time with a list of transferring members and the transfer date in order that pension records can be updated correctly, and that these staff stand out from other leavers and new starters whom we are automatically notified of.