Local government pensions update (England and Wales)

A set of principles providing "a positive framework" for negotiations on the future of the local government pension scheme (LGPS) in England and Wales have now been given the green light by government.
The principles and timetable for detailed negotiations were jointly agreed between unions and the Local Government Association after lengthy talks and submitted to the government.

A letter issued by the Secretary of State, Eric Pickles, yesterday contained an unexpected reference to a cap on employers' funding of the scheme, which had not been discussed with unions and has not formed part of the negotiations. This has now been withdrawn and a new letter issued without this reference.

UNISON's service group executives will meet to discuss the proposals at a Pensions Summit on 10 January 2012.

The latest issue of LGPS Campaign News includes the full agreement reached with the Local Government Association (LGA) along with explanatory notes. The government accepted that the LGPS - as a funded scheme with a high proportion of low earners - was different to the other 'pay as you go' schemes and has therefore given the go-ahead for a longer period of negotiation over the short and long-term issues. The government has also agreed to suspend the formal consultation on short-term savings while negotiations take place from January 2012.

This agreement does not apply to the LGPS in Scotland, where there are no current moves to change the scheme. In Northern Ireland the NI Executive has indicated that it is intending to make the same changes as in England and Wales.

There are a number of very important principles for UNISON contained within the framework agreement. These include:

• Zero contribution increases for most members and no change in contributions, if required, until 2014

• Maintain the inherent and relative value of the pension to other public sector schemes

• Prevent opt-out from the scheme and encouraging new members

• Keep Admitted Body Status

• Ensure employers maintain the required contribution levels

• Establish new governance mechanisms at scheme and individual fund levels to ensure good governance and reduce central government intervention

• Negotiation - rather than imposition - of future changes post 2014 - if any are necessary Improve efficiency through a review of procurement, fund management and administration
  

Dave Prentis
UNISON general secretary

'Hope for the best but plan for the worst'

"We will hope for the best, but plan for the worst," UNISON's ruling NEC declared today as it assessed the effect of the 30 November pensions strike.

The day of action was "an absolutely fantastic day, the proudest day of my union life," general secretary Dave Prentis told the meeting in London.

And it had a clear effect: already serious negotiations have resumed and will continue into the new year, after ministers withdrew their deadline demanding agreement by the end of this year.

Talks started this week in the main pension schemes - NHS, local government, civil service and teachers' - and are continuing through December and into the new year, and the negotiators are co-ordinating among themselves, while more central negotiations take place with the Treasury and Cabinet Office.

The TUC public service unions will meet on 15 December to assess the day of action and look at the next steps.

But at the same time, the NEC agreed, UNISON needs to build on the momentum of 30 November, keep the union prepared for any further action if necessary, and keep members - especially those who joined in the run-up to the dispute - involved in the campaign.

All the relevant service group executives will meet in early January to be updated on negotiations and plan for any future industrial action.

The NEC called on regions to

• maintain high active profiles through December and January;
• call meetings of key activists in service groups to consult on possibilities for further action.

And it urged branches and activists to keep members informed and engaged in discussions to prepare for any offers that might come out of the renewed negotiations and prepared for further, stronger, action if necessary.

Recruitment in the weeks leading up to the strike hit record levels, the NEC heard, with the union recording the highest November recruitment figures in its history.

The meeting also heard a warning of a "major explosions about pay" following Chancellor George Osborne's autumn statement, which included limiting pay increases to 1% following the current pay freeze.

Mr Prentis warned that this would see members' net pay reduced by 20% in real terms from two years ago.

"We've got to gear up this union to deal with pay as we geared up to deal with pensions."

The NEC also:

• agreed to send a message of support to Unilever workers who have voted for strike action over attacks on their final salary pension scheme;
• received an update on the campaign to defend the NHS, focussing on the continuing campaign against the government's Health and Social Care Bill, currently going through the House of Lords and urged support for the Big NHS Weekend activity;
• agreed the union's objectives and priorities for 2012;
• agreed financial planning and budgets for the year ahead, including a continued fighting fund, and received the union's accounts for the nine months to September;
• started planning for the 2012 national delegate conference.

The Great Pension Robbery Explained. Part 1: RPI to CPI

In the June 2010 Budget the Chancellor announced without consultation that the Government will “switch to a system where we up-rate public service pensions in line with consumer prices rather than retail prices”. That is a switch from the Retail Price Index to the Consumer Price Index.CPI and RPI are calculated from the same underlying price data but there are significant differences, notably the following:

1. Various housing elements included in RPI are excluded from CPI including mortgage interest payments and council tax.


2. CPI is generally calculated using a geometric mean whereas RPI in contrast is calculated using an arithmetic mean.


3. In classifying goods and services, CPI follows an international classification system whereas RPI follows its own system.

As a result of these differences, since 1997 (when the 12 month rate of change for CPI was first available), RPI has been on average 0.8% a year higher than CPI. The repercussions for pension scheme members are therefore somewhat obvious, thousands cut from the value of individual public sector pensions at a stroke, without consultation or negotiation.

How much worse off will you be under the pension proposals?

Pay more, work longer, get less.
Many public service workers are being asked to pay more in pension contributions by an average of over 50%.

You're being asked to work longer, as the retirement age for public service workers is set to increase.

And you'll get less. By using the Consumer Price Index (CPI) instead of the Retail Price Index (RPI) anyone getting their pension could be 8.5% worse off by 2017.

And the extra money isn't being used to improve pension schemes for the future, it's going straight to the Treasury to pay for the bankers' crisis.

Find out how you will be affected.

Pensions calculator

Local Government Pension Scheme (LGPS) England & Wales

• > How much more will you pay?

• > How much longer will you work, and how much pension will you lose?

Laughing all the way to the bank...

Public service workers are being asked to pay for the bankers' crisis, by an average increase in their pension contributions of more than 50% if they earn above £15,000 full time. This extra money isn't being used to improve the pension schemes for the future – it's going straight to the Treasury to pay for the bankers' crisis.

But why can't the bankers' pay for the crisis out of their own pockets? Is it because their own pensions aren't big enough? InFocus uncovered the facts about some of the pension pots that bankers have to struggle by on during their retirement and compares them to the 'gold-plated' pensions of some of our public service workers.

After all: 'We're all in this together' – right?

Eric Daniels: aged 59
Group chief executive of Lloyds Banking Group.
Worked there from June 2003, retired 28 February 2011.
Pension pot: valued at £5.03 million last December.
Annual pension: £210,000 a year.

Gill Malik: aged 59
Housekeeper in West Suffolk Hospital.
Worked there for 20 years (contracted out for seven years).
Pension if she retires at 60: £1,782 a year.
Pension if she retires at 65: £2,764 a year.

Fred Goodwin: aged 50 at retirement
Chief executive of the Royal Bank of Scotland.
Worked there from 2001 to 2009.
Annual pension: £342,500.
Poor Mr Goodwin had to reduce his pension following public outcry and negotiations with RBS. However, he was entitled to keep an estimated £2.7m tax-free lump sum as well, which would have helped to soften the blow.

Carole Maleham: aged 59
Driver for museums and arts for Rotherham borough council.Employed by council for 26 years (unable to join the pension scheme for many years as she was a part-time worker).
Expected pension: £3,000 a year.

John Varley: aged 54 at retirement
Chief executive of Barclays PLC until 31 Dec 2010.
Worked at Barclays for 28 years.
Pension pot: £18.256 million.
Annual pension: £619,000 a year.

The Branch Hardship Fund

A message from our Branch Secretary:

This ballot is probably the most important thing you will ever have to vote on in your working life: not just for you, but for every new employee in the future.

What this Coalition government is aiming to do with your pensions is nothing short of theft and is totally unfair. No other pension scheme outside of the Public Sector is being attacked in this way. Why should we have to Work longer and Pay more to Get less?

I cannot stress how important it is to get a really big yes vote if we are to make the government wake up and listen to us.

Of course everyone will suffer some degree of financial loss by striking. We are all going to lose a day’s pay and everyone will feel the pinch, especially given the current economic climate and our ongoing pay freeze.

If any member feels that they will suffer particular hardship as a consequence of taking a day’s action (maybe because they are already on low pay or receiving a means-tested benefit, have nursery fees to pay or large debts) they can make a claim to the hardship fund. There are no hard and fast rules. In the past we have had few applications, and every one has been successful.

There is a form to fill in. I know it looks rather intimidating but your steward will be more than happy to help you fill it in if you find the form particularly difficult. We will need to see wage slips showing the strike deduction and the one for the previous month. We cannot agree hardship fund applications or give out any money until we have seen these two wage slips. The deductions won’t come out until the December pay run, so we will be considering applications as early as possible in January. We will make payments as quickly as we can.

I can assure you that all claims will be dealt with sensitively and in the strictest confidence. Please Vote YES to protect your Pension!!!!

In solidarity,

Caroline Glendinning
Oxford City UNISON Branch Secretary

Pension cuts: what could they mean to you?

For the latest on what the cuts to the LGPS could mean to you, please see UNISON's latest newsletter (click here).

Also, please click here to sign the e-petition against the change from using RPI to CPI to measure pension uprating. This sees a cut in all our pensions, even for those who have already retired.