Charities are increasingly reviewing the pension benefits that they provide to staff. Some participate in the Local Government Pension Scheme (LGPS), the NHS Pension Scheme, the Teacher’s Pension Scheme or another defined-benefit pension scheme. However with reducing income streams and rising costs, many are reviewing whether they can continue to offer defined-benefit pensions. 

With many charities having to restructure and/or change terms and conditions, they are keen to minimise the substantial pension strain costs that can arise in the LGPS, both in redundancy and restructuring situations. Often these costs are unavoidable, but we have advised a number of LGPS employers on how best to manage change programmes to minimise the impact on redundancy and business efficiency.  We also help employers ensure that decisions on ill-health benefits are appropriately managed, to avoid unnecessary costs.

Strategic advice on charity pension schemes

Some charities have made the decision to close access to defined-benefit pensions, either for all staff or for new joiners. Where the decision is made to close to all staff, consultation is required with a view to reaching agreement with staff about that change. We have helped a number of charities to close access to defined-benefit pensions schemes, working with them to ensure effective consultation and negotiation with a view to reaching agreement, as well as advising on how to go forward if agreement can’t be reached. As part of our service, we help charities to liaise with pension schemes to agree the terms of exit, including how exit payments will be structured, where relevant.

With the lifetime allowance affecting an increasing number of staff, we advise charities on putting in place alternative arrangements for those who have reached the lifetime allowance. Additionally, with charities looking to merge, form new group structures or re-organise existing ones, we help to ensure that there is no unexpected crystallisation of employer debts as a result of the arrangements put in place.

Some charities are looking to grow their income by bidding for contracts with local authorities or NHS commissioners. When bidding, the requirement to ensure that transferred staff can still access the LGPS or NHS Pension Schemes (or a broadly comparable scheme) is more relevant than ever. The risks of variable contribution rates, additional contributions, exit payments and the requirement to obtain a bond are significant and being clear about what risks a contractor is expected to take on is critical. We have considerable experience in advising and negotiating detailed pension arrangements in outsourcing situations and helping charities ensure that they understand the arrangements they are entering into, so that risks can be managed appropriately. 

If you would like further support and advice regarding pensions, or simply want to understand how we could help you, please get in touch.

Our experience in advising commissioners, as well as charities, means that we are able to provide valuable insight into the approach taken.

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