Public sector pensions discourage private sector bidders

by David Davison   •  
The CBI has produced research suggesting that private sector businesses are being put off bidding for public sector work by the additional 25% - 50% of salary cost of pension provision which leaves many unable to compete with public sector employers who typically pay around 15%. The focus of the research was unfunded pensions schemes and there was a call to provide solutions such as admitted body status available in local government schemes. However my experience working with employers in this sector is that they are exposed to very similar problems. Whilst the communication has undoubtedly improved over recent years it can frequently be far from clear and often confusing, especially for employers who lack pensions experience. The negotiation process with local authority staff can also be tortuous as they often fail to see the big picture or understand even the superficial knowledge of pensions required. This can place a heavy reliance on the need for professional advice, a need which can all too frequently be ignored until it is too late. When advice is sought the cost involved in negotiations can also be a discouraging factor. I agree that there is a need for an overhaul of the pensions system related to private sector tendering but this also needs to include the process for LGPS which requires a much greater degree of transparency to ensure employers know exactly what they are signing up for. For additional information on our public sector services see our Public Sector Practice page or contact David Davison.

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