Vital protection for the pension rights of public sector workers transferring to the private sector must be retained, says Prospect.

The union was responding to a Treasury consultation in June on the future of the Fair Deal policy, which requires any new employer to provide a ‘broadly comparable’ pension for staff compulsorily transferred out of the public sector.

The deal – introduced in 1999 and further clarified in 2004 – sets minimal criteria for protecting accrued and future pension rights, including continued provision of defined benefit schemes.

“The Fair Deal has played an important part in retaining committed and motivated staff throughout the contracting-out process,” said Prospect pensions officer Neil Walsh. “It ensures public servants are treated fairly.”

Walsh urged the Treasury to conduct its review with an ‘open mind’. In March Lord Hutton’s report on public service pensions suggested Fair Deal represented a barrier to plurality, making it “more difficult to achieve the efficiencies and innovation which new providers can bring.”

But Walsh said: “Fair Deal should stay. Abolishing it would open the door for transferring public services to contractors who cannot deliver decent pensions.”