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Pensions (Contingent Liabilities)

Volume 587: debated on Tuesday 28 October 2014

I am pleased to inform the House that I am today laying a departmental minute to advise that the Ministry of Defence has received approval from Her Majesty’s Treasury (HMT) to recognise a new class of contingent liability associated with the provision of pensions to staff compulsorily transferred from the public sector under new fair deal arrangements.

As part of the naval base operating centre transformation programme, and after a competitive procurement process, approval was given to outsource provision of reception centre services at Her Majesty’s naval base Devonport to Babcock International Group. The contract was awarded on 1 September 2014 and will lead to the transfer of 20 assigned civilian posts under the Transfer of Undertakings (Protection of Employment) legislation on 1 December 2014.

This transfer of undertaking will be implemented under new fair deal arrangements, which will generate future contingent liabilities for pension costs. HMT approval was granted on 8 August 2014 and I am advising Parliament of the approval of contingent liability for pension costs associated with such transfers under new fair deal arrangements.