New Fair Deal for the LGPS in the UK: What Employers, Admitting Bodies and Trustees Must Do in 2026

The fair deal LGPS UK landscape changed fundamentally when the government published draft regulations to enshrine New Fair Deal protections directly into the Local Government Pension Scheme rules for England and Wales. For the first time since the non-statutory HM Treasury guidance of October 2013, transferred public-sector staff will enjoy pension protections backed by statutory force rather than policy expectation alone. This guide sets out exactly what local authorities, outsourcing contractors, admitting bodies and administering authorities need to do, right now, to comply with the new regime, avoid funding gaps and protect scheme members.

Executive Summary: What the New Fair Deal Changes Mean in One Page

Who is affected? Every local authority that outsources services, every contractor or arm’s-length company that receives transferred staff, and every LGPS administering authority and pension committee responsible for admissions and funding.

When? The government’s “Scheme Improvements, Access and Protections” consultation closed in December 2025. Draft statutory instruments, including The Local Government Pension Scheme (Fair Deal) Regulations, were published alongside the consultation response in early 2026. Provisions are expected to take effect once the final SI is laid. Administering authorities should treat the draft as the operational baseline for current procurement exercises.

What are the top immediate actions?

• Notify your administering authority of any live or planned outsourcing that involves TUPE-transferred staff.
• Review all current tender documents to ensure pension-protection clauses align with the draft fair deal statutory instrument.
• Audit existing admission agreements to identify contracts that may need novation or amendment under the new framework.
• Schedule an urgent pension committee or trustee meeting to assess funding-strategy implications.
• Brief affected employees on the protections the new regulations provide.
• Obtain actuarial advice on any changes to employer contribution rates or cessation-debt triggers.

What Is New Fair Deal for the LGPS and Who Does It Cover?

New Fair Deal is the statutory mechanism that ensures staff compulsorily transferred from a local authority (or other LGPS employer) to a contractor continue to have access to the LGPS or to a pension scheme that provides broadly comparable benefits. Until 2026, LGPS fair deal protections rested on HM Treasury’s non-statutory guidance published in October 2013. While central-government pension schemes, including the Civil Service Pension Scheme, had already embedded Fair Deal in their own rules, the LGPS had not. The draft regulations close that gap.

The consultation document published by the Ministry of Housing, Communities and Local Government on GOV.UK proposes to bring pension protections on staff transfers in local government into line with the government’s Fair Deal guidance, creating a statutory obligation where previously only a policy expectation existed.

Scope: Which Employees, Transfers and Situations Are Covered?

The draft SI applies to compulsory transfers of staff from an LGPS employer to a “Fair Deal employer”, typically a private-sector or voluntary-sector contractor, or a local-authority-owned company, where the transfer is connected with the outsourcing of a function. Key points on scope include:

• TUPE transfers. The protections operate alongside the Transfer of Undertakings (Protection of Employment) Regulations 2006. Where TUPE applies, the pension obligation runs in parallel.
• Active LGPS membership. The consultation proposes that transferred staff should remain active members of the LGPS. The contractor (Fair Deal employer) would be required to facilitate this without the traditional admission-agreement route in many cases.
• Exclusions. Voluntary moves, secondments and transfers between two LGPS scheme employers fall outside the Fair Deal framework.

Key Dates and Retrospective Effect: Fair Deal LGPS UK Timeline

The draft regulations do not generally operate retrospectively. Existing admitted-body arrangements entered into before the commencement date will continue under their current terms, subject to specific transitional provisions set out in the draft SI. New outsourcing arrangements entered into after the effective date must comply with the statutory framework from day one.

Practitioners should monitor the GOV.UK consultation page for the precise commencement date once the final SI is laid before Parliament.

Who Must Act: LGPS Access and Protections Obligations by Entity

The compliance burden is shared across three categories of participant. The table below summarises each entity’s core legal obligation and the immediate practical steps that follow.

Industry observers expect the most significant operational impact to fall on administering authorities, which will need to reconfigure their admissions processes and employer-management frameworks at pace once the SI takes effect.

Admission Agreements and Public Sector Outsourcing Pensions: What to Change Now

The draft regulations represent a structural shift in how admission to LGPS works for outsourcing contractors. Under the current regime, a contractor receiving transferred staff must enter into an admission agreement with the relevant administering authority. The proposed Fair Deal framework replaces that requirement in many cases with a statutory right of access, meaning the contractor becomes a “Fair Deal employer” by operation of law rather than through a negotiated admission agreement.

When Are Admission Agreements Still Required?

The draft SI does not eliminate admission agreements entirely. They will still be necessary where:

• A contractor chooses to provide LGPS access voluntarily (outside a compulsory transfer).
• Transitional provisions apply to existing admitted-body arrangements entered before the commencement date.
• The administering authority and employer agree that an admission agreement is the most appropriate vehicle for managing liabilities and funding.

For new outsourcing arrangements falling within the Fair Deal framework, the likely practical effect will be that contractors participate in the LGPS without a separate admission agreement, but remain subject to the contribution, data and funding obligations set out in the SI.

Contract Drafting Checklist for Outsourcing

Whether or not a formal admission agreement is required, the outsourcing contract itself must address pension risk. The following clauses should be reviewed and, where necessary, red-lined:

• Pension access guarantee. Confirm the contractor’s obligation to permit continued LGPS membership for transferred staff throughout the contract term.
• Indemnity. Include a mutual indemnity covering pension liabilities arising from the contractor’s failure to comply with SI obligations or to pay contributions on time.
• Funding protection. Specify how cessation debts will be handled if the contract terminates early, pass-through, ring-fenced, or risk-sharing.
• Data sharing. Require the contractor to provide accurate payroll and membership data to the administering authority in the format and frequency specified by the fund.
• Liability on termination. Define which party bears the residual pension liability when staff transfer back to the authority or to a successor contractor.

Sample clause (illustrative, seek legal advice before use):

“The Contractor shall, for the duration of the Contract, ensure that all Transferring Employees who are active members of the LGPS immediately before the Service Transfer Date continue to have access to the LGPS on no less favourable terms than those enjoyed immediately before the transfer, in accordance with the Local Government Pension Scheme (Fair Deal) Regulations [year] and any statutory guidance issued thereunder.”

LGPS Guidance for Employers: 12-Step Compliance Checklist

Local authorities and other LGPS employers preparing an outsourcing should work through the following steps before and after the transfer date.

1. Identify affected staff. Map every employee who is an active LGPS member and whose role falls within the scope of the outsourcing.
2. Notify the administering authority. Provide advance written notice of the planned transfer, including estimated staff numbers, payroll data and proposed transfer date.
3. Update procurement documents. Embed Fair Deal pension obligations into the invitation to tender, service specification and evaluation criteria.
4. Obtain actuarial input. Commission the fund actuary to calculate indicative employer contribution rates for the contractor and any cessation-debt exposure.
5. Draft or red-line the outsourcing contract. Include the pension clauses set out in the checklist above.
6. Determine whether an admission agreement is needed. Assess whether the arrangement falls within the statutory Fair Deal route or requires a separate admission agreement.
7. Agree financial protections. Negotiate a bond, guarantee or parent-company indemnity where the administering authority requires one.
8. Communicate with employees. Issue clear, plain-language information explaining that LGPS membership will continue after the transfer, template communications should be agreed with the fund.
9. Confirm TUPE compliance. Ensure the pension and employment obligations under TUPE and the Fair Deal SI are aligned and non-contradictory.
10. Execute pre-transfer data handover. Provide the contractor and administering authority with a complete membership data file, including contribution histories, pay references and opt-out records.
11. Monitor post-transfer compliance. Establish a reporting schedule for the contractor to confirm contributions have been paid and data submitted on time.
12. Plan for contract end. Include provisions for the return of staff, successor-contractor transfer or cessation-debt settlement at contract expiry.

LGPS Admitting Body Obligations: Contractor Checklist

Contractors receiving transferred staff carry their own set of obligations. The draft SI makes clear that a Fair Deal employer continues to be under an obligation to pay the appropriate administering authority any amounts required, including employer contributions and any additional payments specified by the fund actuary.

• Cost the pension obligation before bidding. Request an indicative contribution rate from the fund actuary and build it into your tender price. Pension costs are not optional overheads, they are statutory obligations.
• Agree the employer contribution rate. Work with the administering authority and actuary to fix or review the rate at contract commencement and at each actuarial valuation thereafter.
• Establish payroll interfaces. Ensure your payroll system can report LGPS contributions, pensionable pay and membership data in the format required by the administering authority.
• Provide a financial guarantee. Be prepared to offer a bond, parent-company guarantee or ring-fenced reserve if required by the administering authority’s admissions policy.
• Budget for cessation risk. If the contract ends and a cessation debt crystallises, you are liable for the deficit attributed to your employees. Model this exposure at the outset.
• Negotiate pass-through terms where available. Some funds offer pass-through or pooled arrangements that limit the contractor’s funding risk, explore these early in the procurement process.

Trustee Actions and Governance for Administering Authorities

Administering authorities and pension committees are the gatekeepers of the LGPS. The fair deal statutory instrument imposes new duties that require immediate governance action.

Pension Committee and Trustee Meeting Checklist

• Commission a legal briefing. Obtain a detailed analysis of the draft SI and its impact on the fund’s current admissions policy and FSS.
• Review and update the Funding Strategy Statement. Assess whether current FSS provisions accommodate the new class of Fair Deal employer. Consider whether contribution rates, cessation triggers and deficit-recovery periods need adjustment.
• Reassess employer covenant. Fair Deal employers may have different financial profiles from traditional admitted bodies, the fund must evaluate covenant strength before accepting new employers.
• Update the admissions policy. Align internal procedures with the statutory route for Fair Deal admissions. Clarify which arrangements still require a formal admission agreement and which proceed under the SI alone.
• Prepare member communications. Draft template letters or online content explaining to transferred members that their LGPS membership continues and what, if anything, changes in practice.
• Update the risk register. Add Fair Deal implementation as a risk item, noting the potential for increased employer numbers, funding volatility and administrative burden.

Data the Administering Authority Will Need

Frequently Asked Practical Issues: Mini Case Studies

Case Study 1: Small Parish Council Outsources Grounds Maintenance

A parish council with two grounds-maintenance employees decides to outsource the service to a local landscaping company. Both employees are active LGPS members. Under the new framework the council must notify the administering authority, confirm that the landscaping company will be treated as a Fair Deal employer, and ensure the outsourcing contract contains pension-access and indemnity clauses. The landscaping company must budget for employer contributions and may be required to provide a financial guarantee. The administering authority will set the contribution rate on actuarial advice and monitor compliance throughout the contract.

Case Study 2: Large Council Transfers Leisure Services to an Arm’s-Length Company

A metropolitan borough council establishes a wholly owned leisure company and transfers 200 staff under TUPE. Because the company is a separate legal entity, the transfer falls within the Fair Deal framework. The council negotiates a pass-through funding arrangement with the administering authority so that pension risk remains with the fund rather than the new company. The pension committee updates its FSS to reflect the new employer, sets an employer contribution rate, and requires the council to provide a guarantee for any cessation liabilities. Affected employees are issued a joint communication from the council and the leisure company confirming their LGPS membership is unaffected.

Next Steps

The implementation of the fair deal LGPS UK framework demands prompt, coordinated action from every stakeholder in the outsourcing chain. Local authorities should begin auditing their procurement pipelines immediately, contractors should model pension costs into current and forthcoming bids, and administering authorities should update governance frameworks before the final SI takes effect. Early engagement with fund actuaries and specialist legal advisers is essential to avoid funding surprises, compliance gaps and, ultimately, detriment to scheme members.

This article is general guidance based on the draft statutory instruments and consultation documents available as at 12 May 2026. It does not constitute legal advice. Readers should verify all positions against the final published regulations and seek professional advice tailored to their specific circumstances.

Sources

1. GOV.UK, Local Government Pension Scheme in England and Wales: Scheme Improvements, Access and Protections
2. GOV.UK, Draft Statutory Instrument: The Local Government Pension Scheme (Fair Deal) Regulations
3. HM Treasury, Fair Deal Guidance (October 2013)
4. Bevan Brittan, Introduction of New Fair Deal to the LGPS
5. Barnett Waddingham, Consulting on Fair Deal in the LGPS
6. Local Government Lawyer, Next Steps for the LGPS After the Access and Fairness Consultation
7. Burges Salmon, Fair Deal and the LGPS: Government’s October Consultation Explained
8. UNISON, Response to the LGPS Access and Protection Consultation
9. Osborne Clarke, UK Public Service Pensions Update: October 2025
10. GMB Union, Pensions / New Fair Deal