Pensions

UNISON Conference 2012, held in Bournemouth this week saw a key debate on the future of your Pension Scheme. Doncaster UNISON played a leading role in this debate, moving Emergency Composite 1, which called for Conference to give a clear and transparent assessment of new proposals to all members, in other words to tell members whether we believe this is a, "good," or a, "bad," deal. This motion, supported by many other branches was, unfortunately in our view, not carried. However, what was agreed is that a process of consultation with members will take place over the next 4-5 weeks and will be followed by a ballot of members at the end of July!
We do not believe that this is an appropriate timetable,  particularly as many of our members based in schools will break for the summer holidays in July and may not have been able to attend briefings on the new proposals. In addition, what is clear is that this is a timetable demanded by the Con-Dem Coalition government to suit their aims of attacking the Local Government Pension Scheme (LGPS). Indeed, as admitted by Heather Wakefield (UNISON National Officer), "...this is not our timetable!"

So what are the, "Highlights," of the, "New Look LGPS 2014," and what do we think?

• A Career Average Revalued Earnings (CARE) scheme using CPI as the revaluation factor (the current scheme is a final salary scheme).

Our View:- There is no funding issue with the current final salary scheme, indeed it takes in 4 bn more every year than it pays out. When we took strike action on 30th Nov 2011 we were told that a Career Average Scheme would be inferior and that we were defending the Final Salary Scheme. Uprating by CPI (rather than RPI) only looks good if we assume low levels of growth in wages. That may fit right now, but historically wage levels have increased at a level higher than this every year.

• The accrual rate would be 1/49th (the current scheme is 1/60th).

       Our View:- This seems to be better - this means that for every year you pay into the scheme your pension pot will grow by 1/49th of your actual pay for that year. However, if you remember that this will be on a career average salary and not final salary it doesn't sound quite as good.

• There would be no normal scheme pension age, instead each member's Normal Pension Age (NPA) would be their State Pension Age (the current scheme has an NPA of 65).

Our View:- Linking your retirement age to the state pension age (SPA) means that many UNISON members will face working to 68 (increasing potentially to 71 if the government get what they want). This means potentially more members dying in service, or being physically unable to work to this age, more dismissals through capability and of course fewer years in retirement. Any future increase in the SPA would automatically apply to the age you could then retire.

• Average member contributions to the scheme would be 6.5% (same as the current scheme) with the rate determined on actual pay (the current scheme determines part-time contribution rates on full time equivalent pay). While there would be no change to average member contributions, the lowest paid would pay the same or less and the highest paid would pay higher contributions on a more progressive scale after tax relief.

Our View:- The fact that contribution rates will change for nobody until 2014 and for the overwhelming majority there will be no increase (in fact you may pay slightly less) is positive. The industrial action in Nov 2011 did force Government to reconsider their plans for this. However more highly paid members will see contribution rates increase significantly. But you will be paying more because your retirement age is going up to 68. Also making all pay (including overtime and additional hours) pensionable means that in the future you will see 6.5% average taken from all your pay and not just a part of it. This does mean your pension pot will be bigger but it also means you will pay more.

• Members who have already or are considering opting out of the scheme could instead elect to pay half contributions for half the pension, while still retaining the full value of other benefits. This is known as the 50/50 option (the current scheme has no such flexible option).

Our View:- The average pension for local government workers is £4200 per annum and for women workers this falls to £2800. If you take this along with up-rating by CPI and paying only 50% contributions this will mean an even lower pension for the lowest paid workers. The real issue for people who currently don't feel able to afford a pension is the rotten culture of low pay and pay freezes in local government - 50% of a very low pension after a lifetime of public service is no reward at all.

• For current scheme members, benefits for service prior to 1st April 2014 are protected, including remaining „Rule of 85‟ protection. Protected past service continues to be based on final salary and current NPA.

Our View:- This simply means that the value of what you have already paid in will be protected and if you meet certain age criteria you will be able to access your pension if your age and length of continuous service added together is 85 or greater.

• Where scheme members are outsourced they will be able to stay in the scheme on first and subsequent transfers (currently this is a choice for the new employer).

Our View:- This is a welcome move to protect staff who find themselves in a TUPE transfer situation. In the current climate of outsourcing and privatisation in the public sector any protection to members pensions is welcomed.  Currently a new employer simply has to provide a pension scheme of an equivalent value to that of the LGPS. However this protection doesn't change the fact that your right to stay in the pension scheme will still be on the new provisions of LGPS 2014.

When we took strike action on 30th Nov 2011 we did so on the basis that we would not, "Work Longer, Pay More and Get Less!". It is Doncaster UNISON's view that although some elements of the new proposals are not as bad as they might have been, overall they fall well short of the objectives that you and millions of other public sector worker took action to defend. The unity that we saw across the Trade Union movement gave us the upper hand in challenging a weak and vicious ConDem government. Doncaster UNISON will now be arranging a series of  meetings and briefings in order to consult with our members.  Time is short, please make every effort to attend one of these meetings.

Full details are available online at - http://www.unison.org.uk/pensions/lgps.asp