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UK roundup: National Health Service, AQA, USS

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  • UK roundup: National Health Service, AQA, USS

UK - An impact assessment commissioned by the UK department of health claims a new economic regulator would reduce the 14% cost penalty imposed as a result of pension liabilities on private-sector providers operating within the National Health Service (NHS).

The report acknowledged that independent providers "may have been deterred from entering the market" by their competitors' state-subsidised pension schemes, but added that an economic regulator "could help address these issues over time".

Under the terms of contracts awarded by the NHS to private-sector providers, compulsorily transferred employees retain their public-sector pension benefits.
Until now, so have many clinical staff opting out of the NHS to form social enterprises - despite a government line that employees leaving the NHS of their own accord have no right to a continued NHS pension.

The government recently argued that transfer of pensions for NHS employees moving into a so-called 'community interest company' in Essex "will not set a precedent".

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Ian Greenstreet, a partner at law firm Nabarro, told IPE: "To compete, private-sector companies have to offer higher salaries or equivalent DB schemes. If to compete you have to provide a DB scheme, it will be a significant barrier to private companies.

"It isn't just the cost to the employer - it will also expose them to increased funding risk."
In other news, the Assessment and Qualifications Alliance (AQA), an exam quango, is to close its DB scheme to new members.

The UNITE union, which opposed the move, pointed out that AQA board members would continue with their own final salary scheme.

UNITE also said it was one of three similar quangos in England to close its scheme.
One of the others, OCR, is a subsidiary of Cambridge University, whose employees are covered by the £31.6bn (€36.7bn) Universities Superannuation Scheme (USS).

Lastly, USS has hired a sustainability specialist to scrutinise its entire portfolio.
The scheme will release details of move next week.

However, UKSIF spokeswoman Lisa Wootton said she was seeing a trend toward pension funds bringing expertise in-house.

"Pension funds know there are people out there with the expertise compared with 10 years ago," she said.

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