POA Circulars

130 | 23.09.2011

Pension Update

The TUC has now concluded and one of the most important motions on the agenda was Composite 5 with regards to public sector pensions.  The Composite was unanimously passed and it called on the General Council to robustly defend public sector pensions and campaign for affordable pensions for all workers in the public and private sectors, on the basis that provision should be based on levelling up and making private companies face up to their responsibilities rather than cutting public sector pensions.  The Composite then went on to call on the General Council to give full support for industrial action, planned for this autumn for those unions whom are prepared to take such action and maximise its co-ordination.

Directly after Congress had concluded on Wednesday 14th September 2011, the Public Sector Liaison Group met and it was determined that a day of action would be enacted on the 30th November 2011 and a press release was promulgated that day.

For clarification the day of action can take many forms and ultimately the National Executive Committee will determine our next course of action.  The POA have been clear that we would rather reach a negotiated settlement in the Civil Service Schemes and indeed NHS Schemes.  The negotiations need to be meaningful, constructive and transparent.  At present that is not the position and at a meeting on the 22nd September 2011, the Cabinet Office Minister Francis Maude was informed of our concerns.

Government plans are now becoming clearer on how they intend to take forward the pension reforms recommended by Lord Hutton.

Even although the negotiators for the Civil Service Unions are still in dialogue with Francis Maude, (the Minister responsible for taking the reform forward) on the principles of the reforms it has been announced that there will be a rise in contributions prior to the main reforms being introduced in 2015.

Government is demanding that you pay an average increase of 3.2% to be phased in over the next 3 years.

In real terms this means that our members YOU will have to pay on average an extra £1000 per year.

This would not be so unpalatable if benefits were increasing or at worst remaining as they are.  BUT THIS IS NOT THE CASE.

The imposition of the change of indexation from RPI to CPI means your benefits will be worth less in the future.  CPI is on average 1.2% lower than RPI.  YOU WILL BE PAYING MORE TO GET LESS.

Our members who are currently in the NUVOS Scheme are the biggest losers of this imposed change.  Their pension pot is index linked on an annual basis.  This means for example someone in the NUVOS scheme who serves for 20 years will have lost 24% of their pension before they receive it.  That is why the POA has launched a legal challenge on this issue by way of Judicial Review, which commences on 25th October 2011.

CAN THESE CHANGES BE JUSTIFIED?

In our opinion NO our pension schemes have been reformed twice already in 2002 and 2007.

These reforms have already been audited by the Governments own auditors.  Their report highlights that the reform already carried out will realise future savings of £64 Billion.
We believe the present reforms are a very crude money grabbing exercise, which will only serve to put hard working people, who are already in the grip of an extended pay freeze under severe financial pressure.

THE GREAT PENSION ROBBERY DOES NOT STOP THERE

In 2015 all our present pensions’ schemes will be closed and we will be asked to join a new scheme.

The new scheme will be a career average earnings scheme the same as NUVOS, but with an accrual rate a lot lower than NUVOS and a higher contribution rate.
Every member of the new scheme is likely to be asked to pay the same contributions in percentage terms.

This means that members who are presently in the CLASSIC scheme will have to pay at least another 2% in 2015.

These proposed increases in pension contributions have to be assessed in the present economic situation.

We are presently in the midst of a 2 year pay freeze, with some Politicians and economic commentators making the case for this to be extended.  The cost of living is on the rise and the tax and benefits system is undergoing constant change.  All the energy providing firms have announced massive increases for gas and electricity and let’s not forget that VAT increased to 20% in January 2011 and National Insurance contributions increased by 1% in April 2011.

All in all a pretty bleak future that in real terms will see the value of your income drop by approximately 18-20%.


WHAT ELSE IS BEING PROPOSED?

An increase in retirement age for public sector workers in line with the state pension age.  The exception for uniformed staff in other services is not being applied to operational prison staff as yet. This is an issue of major concern to us and we continue to pursue this point with the Minister at every opportunity.

WHAT HAPPENS NEXT?

Meetings between the POA/Civil Service Unions and Treasury Officials will now intensify over the coming weeks.  Already meetings have been approved for 27th September, 4th October, 11th October, 18th October and 25th October 2011.

WILL THE POA BECOME INVOLVED IN THE NEGOTIATIONS?

Yes.  The Pensions Act requires that all recognised Unions should be involved.  We will participate fully to try and secure the best deal possible for our members.

WHAT HAPPENS IF WE CANNOT REACH AGREEMENT?

So far we have been involved in a joint campaign against these reforms with all public sector unions.  This will continue. 

Various Unions in the public sector have already balloted for industrial action or are getting ready to ballot prior to the 30th November 2011.

The POA balloted our members by way of a workplace ballot in July.  The result was an overwhelming rejection (96.7%) of the Governments proposals.

The POA released a press release and urged the Government to come to the negotiating table in a fair, open and honest way so that we might reach a deal that was sustainable and affordable, but did not compromise our pension benefits.

That still remains our fervent hope and we will do all we can to achieve these goals.
However, we are not naïve, we accept that achieving these goals will be difficult maybe impossible, but we will remain at the negotiating table as long as the negotiations are meaningful.

The NEC will decide our strategy and what has to be done in the light of the ballot result.  On announcing the result to the press it was clear that “we will take any and all appropriate action deemed necessary to safeguard our pension provision”.

That motion was passed at Conference this year.

The TUC will be making available on disc a copy of congress speeches.  Once we have received the disc the speeches of the National Chairman and myself will be uploaded onto our website.

Yours sincerely

 

STEVE GILLAN
General Secretary