Public sector pensions 'fair dealing' under review

By Jonathan Dawes, Mon 28 Feb 2011 - Published in Money

Public sector workers could lose their current pension rights if their employer is bought by the private sector, according to a proposal in the government's review of public sector pensions at CityWire.

Under the existing fair deal rules, when public sector businesses are sold to the private sector employees must be transferred along with their pensions rights.

However, the Treasury confirmed that John Hutton, chair of the public service pension's commission, will propose scrapping this rule as part of a range of possible cost saving measures.

Rosalind Connor, a pension's partner at law firm Jones Day, said: "The Home Office has rules so that if any public sector services are sold or outsourced the private sector employer must enrol employees in a scheme that offers the same benefits.

If not she added that potential employers in the private sector would have to set up a costly and complex defined benefit scheme.

Recently, the government said it was preparing for a potential wave of strikes in the summer when billions of spending cuts will begin to be felt.

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