A couple of days ago, the Metropolitan Police Service (MPS) renewed its pay and pensions outsourcing contract with Logica, a £10m deal.

The extension will give the MPS the opportunity to introduce organisation-wide electronic payslips, overtime and expenses for the first time, as well as providing staff with greater use of self-service IT systems.

Similarly, reports suggest that UK-based Diligenta, the insurance and pension outsourcing unit of Tata Consultancy Services (TCS), has been approached by two prospective clients for outsourcing contracts worth more than £100 million each.

But it doesn’t stop there. A couple of days back Alliance Boots announced its decision to outsource part of its pension plan, which according to reports, could see the pharmaceutical retailer and wholesaler, offload about £300m of retirement fund liabilities to Pension Corporation, a specialist buyout vehicle.

As part of the plan, Boots has closed its UK defined-benefit pension schemes to future accrual for active members. Whether this is a cost cutting measure or not, Boots is not the first – and it’s unlikely it will be the last – to decide to reassess and reorganise its liabilities.

Last year, Barclays Bank decided, despite initial opposition from its staff, to axe the final-salary pension schemes for existing members.

Pension consultancy Mercer suggests that deals like that closed by Boots are part of a trend that has been increasing over the last 12 months.

It seems that after three years of living in a difficult financial environment, the City folk are trying to come up with new ways to keep their jobs resulting in innovative products. Which is good, as long as we don’t see another mess like the one that ensued from the sub-prime and CLO market crisis…

Concerns from the outsourcing industry may stem from the Government’s decision to apply the consumer prices index (CPI) instead of the retail prices index (RPI) for the price indexing of public sector pensions. The result of this has been an uncertain environment for public-to-private outsourcing exercises although the implications for outsourcing projects will depend to an extent on whether bulk transfers have been agreed or not.

What is certain is the emphasis on pensions in relation to outsourcing will likely become more prominent as the Government’s cost cutting measures begin to be rolled out. It will be a bumpy ride ahead.