31.7  Contractor Scheme

Where this clause 31.7 applies pursuant to clause 31.6, the following shall apply:

31.7.1  The Contractor shall or shall procure that any relevant sub-contractor shall not later than the Relevant Transfer Date or the Cessation Date (as the case may be) nominate to the Authority in writing the occupational pension scheme or schemes which it proposes shall be "the Contractor Scheme" for the purposes of this clause 31.7.  Such pension scheme or schemes must be:

(a)  established within three (3) months of the Relevant Transfer Date or Cessation Date (as the case may be) and maintained until any payment to be made under Schedule 21 (Bulk Transfer Terms) is made;

(b)  reasonably acceptable to the Authority (such acceptance not to be unreasonably withheld or delayed);

(c)  approved by HM Revenue & Customs as an exempt approved scheme under Chapter I of Part XIV of the Income and Corporation Taxes Act 1988 (or capable of such approval provided that the payment to be made to the Contractor Scheme pursuant to Schedule 21 (Bulk Transfer Terms) has been specifically approved by HM Revenue & Customs) or has been registered under section 153 of the Finance Act 2004, as the case may be; and

(d)  certified by [the Government Actuary's Department] [or an actuary nominated by the Authority in accordance with relevant guidance produced by the Government Actuary's Department] as providing benefits which are broadly comparable to those provided by the LGPS. However, in the case of Eligible Employees who are Transferring Original Employees and who are being offered membership of the Contractor Scheme with effect from the Relevant Transfer Date, the Contractor Scheme must be certified as providing benefits which are the same as, broadly comparable to or better than provided under their pension scheme immediately before the Relevant Transfer Date (where this scheme was not the LGPS) 144;

31.7.2  The Contractor undertakes to the Authority (for the benefit of the Authority itself and for the Authority as agent and trustee for the benefit of the Eligible Employees) that it shall and shall procure that any relevant sub-contractor shall procure that:

(a)  the Eligible Employees shall by three (3) months before the Relevant Transfer Date or the Cessation Date (as the case may be) be offered membership of the Contractor Scheme with effect from and including the Relevant Transfer Date or Cessation Date (as the case may be);

(b)  the Contractor Scheme shall provide benefits in respect of the Eligible Employees' periods of service on and after the Relevant Transfer Date or Cessation Date (as the case may be) which the Government Actuary's Department or an actuary nominated by the Authority in accordance with relevant guidance produced by the Government Actuary's Department shall certify to be broadly comparable to the benefits which the Eligible Employees would have been entitled to under the LGPS had they continued in membership of the LGPS;

(c)  if the Contractor Scheme is terminated, a replacement pension scheme shall be provided with immediate effect for those Eligible Employees who are still employed by the Contractor or relevant sub-contractor. The replacement scheme must comply with this clause 31.7 (Contractor Scheme) as if it were the Contractor Scheme;

(d)  before the Relevant Transfer Date or Cessation Date (as the case may be) the trustees of the Contractor Scheme shall undertake by deed to the Authority and to the Administering Authority that they shall comply with the provisions of clauses 31.7.1 to 31.7.3 (Contractor Scheme), 31.8.1, 31.8.3 and 31.8.4 (Undertaking from the Contractor) and Schedule 21 (Bulk Transfer Terms); and

(e)  where the Contractor Scheme has not been established at the Relevant Transfer Date or Cessation Date (as the case may be), the Eligible Employees shall be provided with benefits in respect of death-in-service benefits provided by the LGPS immediately before the Relevant Transfer Date or Cessation Date (as the case may be).  Such benefits will continue to be provided until death-in-service benefits are provided by the Contractor Scheme.

31.7.3  Schedule 21 (Bulk Transfer Terms) shall apply in relation to the terms for bulk transfers from the LGPS to the Contractor's Scheme following the Relevant Transfer Date and any subsequent bulk transfers on termination or expiry of this Agreement.  

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144 The Authority should note that certification by GAD does not take account of any benefits which are payable solely as a result of the member being declared redundant, either compulsorily or voluntarily, where those benefits exceed the normal benefits available to an individual who resigns from employment at the same time.  Such benefits are payable under regulation 19 of the Local Government Pensions Scheme (Benefits, Membership and Contributions) Regulations 2007.  The Authority may wish to consider whether it wants to include any express provisions about the continuation of such benefits in the Agreement, either through the Contractor's Scheme or by way of compensation.  If so, the Authority should consult with its professional advisers about such provisions.  Alternatively, the Authority may wish to consider with its advisers whether such benefits pass under TUPE (where TUPE applies) following the decisions in Beckmann v Dynamco Whicheloe Macfarlane [2002] 64 PBLR and Martin v South Bank University [2003] 85 PBLR.  Discretionary enhanced benefits payable under the Compensation Regulations are covered in Clause 31.9.