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Yes it does.

No Wi-Fi? No problem.
If you’re out of Wi-Fi range, iPad can connect to your phone’s personal hotspot when your iPhone is close by.* With the new Instant Hotspot feature, you’ll see the name of your device in the list of Wi-Fi networks in Settings. Just select it and you’re connected. And when iPad isn’t using your phone’s network, it intelligently disconnects to save battery life.
http://www.apple.com/ios/ios8/continuity/
 
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