Three of the coalition government’s most cherished projects – reducing the ‘red-tape’ burden on businesses, cutting back on ‘gold-plated’ public sector pensions and the ever-enigmatic ‘Big Society’ – underlie a new government consultation on the Fair Deal policy. Alex Mizzi explains.

The Fair Deal policy, introduced in 1999, was intended to protect the pension rights of public sector workers whose employment transfers compulsorily (ie under a TUPE transfer). Generally, employees who belong to an occupational pension scheme have limited rights when their employment transfers under the TUPE (Transfer of Undertakings and Protection of Employment) Regulations. If they belong to a defined-benefit (‘final salary’) scheme or a defined-contribution (‘money purchase’) scheme to which the employer contributes, the new employer must provide a pension which complies with certain minimum standards but which could be much less valuable. An employee could lose the security of a final-salary scheme and see it replaced by a money-purchase scheme with the employer contributing six per cent of salary (the minimum requirement in these cases).