There are three main stages to any bulk transfer exercise under New Fair Deal:
Stage 1 – Preparatory Work
The first step is for the Contracting Authority to engage the Government Actuary’s Department (GAD) in relation to the bulk transfer. GAD will then work with the other scheme’s actuary to determine the basis for the service and/or pension transfer. Under New Fair Deal the benefits provided will be of equivalent actuarial value which means that if the two schemes were identical, service would be provided on a “day-for-day” basis and any pension on a “£ for £” basis. However, schemes often provide differing benefits, and so factors are calculated to allow for this. This preparatory work will also will include discussion and agreement of the transfer value available from the transferring scheme and an assessment of the possible shortfall, if any, against the amount required by Civil Service Pensions to cover the pension credits to be granted. The current “Broadly Comparable” (“BC”) pension scheme will need to provide details of members’ benefits under the BC pension scheme, including their Qualifying Service, in a prescribed format. The data will be required for GAD’s calculations and member option packs (see below) and the qualifying service data will be added to the members’ new pension record to ensure that benefits which require a minimum length of membership (e.g. preserved awards, ill-health pensions) are calculated correctly in the event that a member leaves service shortly after re-joining the Civil Service pension arrangements.
Stage 2 - Options Exercise
The current contractor’s BC pension scheme will be required to communicate with members around the bulk transfer options, collate responses and advise its actuary of final list of members’ elections. Members will normally be given a three month window, from the date of issue of the option pack, in which to decide whether or not they wish to transfer their deferred benefit from the Broadly Comparable pension scheme into Civil Service Pensions on the basis outlined in their option pack (terms are set by GAD on behalf of the Contracting Authority) .
Stage 3 - Payment of the Transfer Value and addition of Service/Pension Credits
The BC pension scheme’s actuary will advise GAD which members have opted to transfer their benefits under the bulk transfer options exercise together with their calculated final transfer value from the BC pension scheme (in line with the agreed basis). GAD will review the data and agree the bulk transfer value calculated by the broadly comparable scheme’s Actuary, then calculate Civil Service Pensions’ requirements and associated shortfall (if any) and notify these figures to the Contracting Authority. The Broadly Comparable pension scheme will then pay the bulk transfer value to the Civil Service account (managed by the Pensions and Finance Team at Cabinet Office) and the Contracting Authority will pay any agreed shortfall.
Finally, the Scheme Administrator will add details of the service and/or pension credits awarded to transferring members to their records once these have been confirmed and supplied by GAD.