Acevo calls for pension guidance to be scrapped

Protection of more generous provision for public sector staff is a significant barrier to third sector contracting, says chief executives body

Chief executives body Acevo has called for the abolition of pension rules that it says prevent many charities bidding for public sector contracts.

Stephen Bubb, chief executive of Acevo, has written to Lord Hutton, head of the Independent Public Service Pensions Commission, asking him to recommend scrapping Treasury "Fair Deal" guidance, which states that any public sector staff taken on as part of a contract must continue to receive the same level of pension provision as before.

Hutton’s commission is expected to produce an interim report later this month making initial recommendations about how to reduce the cost of government pensions.

Bubb said public sector pensions were usually much more generous than those paid to other staff, resulting in a "two-tier system" requiring extra bureaucracy to administer and causing potential morale problems among existing workers.

He also said public sector pensions frequently came with substantial deficits attached, meaning they carried an unknown level of financial risk for charity employers.

"Transferred staff can transfer accrued pension liabilities to their new employers, enabling public sector agencies to dump deficits on third sector organisations, and requiring the latter to shoulder unknown risks if they wish to undertake service delivery," he said.

Bubb said pension laws were a substantial barrier to the government’s plans for "greater plurality of public service provision" and therefore threatened to derail a key theme of the big society.

Ralph Michell, head of policy at Acevo, told Third Sector that the organisation’s decision to write to Hutton followed a series of interviews and focus groups with members.

"This is one of the most significant, perhaps the most significant, barrier to public sector contracting by charities," he said.

The letter was also sent to George Osborne, the Chancellor of the Exchequer, and Francis Maude, the Minister for the Cabinet Office.

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