May 2011 v1

Branch Presentation

The crisis is not of our making

"The price of this financial crisis is being borne by people who absolutely did not cause it, now is the period when the cost is being paid, I'm surprised that the degree of public anger has not been greater than it has."Mervyn King – addressing the Treasury Select Committee

Campaign Objectives - no one can do everything but everyone one can do something!

Prepare members and staff to resist attacks on public sector pensions and their members

Support negotiators to achieve the best outcome possible and prepare for industrial action

Make sure that UNISON members and staff gain a greater understanding of public sector pension schemes – remove the pension jargon fog

Champions and Contacts – training and support will be given

Pensions Champions - Will take a greater role by making make sure union briefings and information on changes topublic sector pensions are understood by the branch, workplace pension contacts and members. They will take a lead role in Supporting contacts, developing local campaign initiatives making sure that the branch and members are prepared to take action to protect public sector pensions.

Pension Contacts - Distribute material, take actions whenrequested. They will be the workplace feedback link betweenmembers and the campaign/negotiators. Talk to and recruit nonmembers.

Public Sector Pensions - What Are The Key Issues We Face?

Change to the way pension increases are calculated – RPI/CPI

Proposals from the UK Budget 2011 Hutton 27 recommendations Scheme contribution increases Retirement age increases Benefit changes to career average Fair Deal – TUPE transfers and pensions

Key Budget Measures

Enshrines contribution increases of 3.2% and could be more Osborne says

Create a flat rate state pension of £7,280pa which will be considered in future public sector benefit design to develop an adequate pension - what is adequate?

May remove the contracted out National Insurance subsidy for employers/employees

No date firm but 2014/15

Pension Benefit Increases – robbing pensioners today and scheme members tomorrow

The Government has laid legislation which will mean increasing public service pensions by Consumer Price Index (CPI) instead of Retail Price Index (RPI) from April 2011

An official Pensions Increase Order increasing pensions in line with the CPI next April was passed in Parliament on the 17th of March – we expect it to be implemented April 2011

The consequences are very significant. CPI is typically, on average, 0.7% per year lower than RPI

Lord Hutton says move represents a 15% cut in benefits

A member receiving the overall average pension in public service schemes of approx £7800pa will be around £117 worse off this year

Contribution Increases – a pension tax to pay back the bankers debt not to support your pension

The Government announced a cut in funding to ‘Pay As You Go’ Public Service Schemes of £2.8 billion a year by 2014/15 (the share for the NHSPS alone is around £1.3 billion)

Plus a further £900m cut in funding to the LGPS in England and Wales

This equates to just over a 3% contribution increase on average for members – or if you pay 6% a 3% addition is really a 50% increase

Contributions to be phased in “progressively” from 2012, with a 40% saving in 12-13, another 40% in 13-14 and the remaining 20% in 14-15

The move away from a final salary scheme to career average

Hutton stated that final salary schemes “disproportionately” favour high flyers

He has recommended switching to a career average scheme for public service workers by the end of the next parliament – i.e. 2015

Crucially he has stated that each year’s pensionable pay should increase in line with increases in average earnings up to when you leave or retire

What is a career average scheme?

This is a scheme that rather than base benefits on the final salary you retire on it calculates them on your average earnings during your scheme membership

Such a scheme could potentially benefit members whose annual salary increases are generally less than the index used to increase pensionable pay and who are unlikely to benefit from regular promotions

There is no detail yet so UNISON cannot comment on it CARE scheme but it must not be a cost-cutting exercise

Making us work longer

The Government has already brought forward the State Pension Age (SPA) meaning that from November 2018 the SPA will be 65 for both men and women

From April 2020 the SPA will be 66 for both men and women. Under current legislation the SPA is due to rise to 67 between 2034-2036 and 68 between 2044-2046

Lord Hutton has stated that with exception of “uniformed services” retirement should increase in line with SPA

For those now 34 or younger it would be 68. For those between 34 and 42 it is 67. For those between 42 to around 57 it will be 66.

Fair Deal Over? – Making it cheaper to privatise

The Government has started a consultation on Fair Deal

Fair Deal is the agreements that enable TUPE transferred staff from public services to either remain in such a scheme or be provided with a “government actuary certified” broadly comparable scheme

There is a big danger than the Government will look to scrap because of the relative cost to companies bidding for public service contracts

This would leave TUPE transferred staff at the pensions mercy of private contractors

Other issues to be aware of A limit on how much employers should pay into the new

schemes and increasing the share of that cost that scheme members pay

“It is in principle undesirable for future non-public service workers to have access to public service pension schemes” Who isn’t a public sector worker?

New and improved governance in all schemes – national bodies

Representation on LGPS investment boards Incentives to merge LGPS funds Privatisation of scheme administration

The Key Issue – Contribution Increase

This is a tax to pay back government debts that were raised to bail out the banks

None of the money will go into the schemes It threatens the whole system – if enough members opt-

out It unites all public sector workers in or have access to a

public sector scheme It could allow public sector unions to co-ordinate

action We need to consult members and prepare for a ballot

for industrial action – likely in Autumn