Broad comparability relates to the protection of transferring employees’ future pension rights.
The idea is to make sure that transferring staff are entitled to pensions in respect of future service that are worth as much as they would have had, were they to have remained with their original employer.
For a pension arrangement to be assessed as being “broadly comparable” to a public sector pension scheme, it does not need to offer identical benefits. However, it must offer the same range of benefits, with the same (or greater) overall value.
The principles on which broad comparability is assessed are set out in this document:
These include both tests of financial and qualitative value.
‘Individual assessment’ or ‘Passport’
There are two alternative approaches to certifying broad comparability, namely an ‘individual assessment’ or a ‘passport’.
- Individual assessment – The pension scheme offered by the new employer is compared with the original public sector pension scheme in the context of the actual employees who will transfer as part of a specific contract. Once broad comparability is achieved, the new scheme will be certified as broadly comparable, but only for this specific transfer.
- Passport – The pension scheme offered by the new employer is compared with a public sector pension scheme, as it applies to a wide range of membership. Once broad comparability is achieved, the new scheme will be certified as broadly comparable for any transfer of members from that public service scheme. The passport is periodically reviewed, but will essentially remain in force until there are changes to the public service scheme.
For a limited number of staff, for a single transfer, then it may be easier to achieve broad comparability by 'individual assessment'. If an organisation intends to bid for many public contracts, then it may be more convenient to establish a scheme which is eligible for a 'passport'.
Interim Passports are issued for periods of up to 6 months to enable Scheme Rules to be amended to meet the agreed benefits package. Final Passports are normally valid for up to two years and are issued once the Definitive Trust Deed and Rules have been certified by our external lawyers as meeting all the conditions in the Interim Passport. A list of all "in force" Passport reference numbers is updated monthly including those for a number of centralised multi-employer schemes set up specifically to meet Broad Comparability requirements for smaller groups of transferring staff.
As an alternative to having a client specific Passport, bidders may consider using one of the multi-employer centralised pension schemes specifically set up to provide pensions for former public sector workers.
Contracting authorities can check on the validity of a current Passport by referring to the GAD “in force” Passport list.
Further information
- Passport system for pensions, v4 Autumn 2009
- Assessment of broad comparability of pension rights, Statement of practice by the Government Actuary, May 1999
- Actuarial assumptions for assessment of broad comparability - August 2010
- Consultation summary on the differential between RPI and LPI - August 2010
- Background note on the differential between RPI/CPI and LPI – October 2010
Contact us
To discuss your requirements, please email staff.transfers@gad.gov.uk, or phone either:
+44 (0)20 7211 2676 or +44 (0)20 7211 2752.
All potential clients of GAD should note that GAD charges fees for the assessment and certification of broad comparability. These fees are discussed and agreed before work commences.