Copy of an e-mail sent to all clerical members Wed 12th October
You will have all received from the Director of Finance an update on the government proposals to change our pensions. The director explains that these are the proposals to ‘start changing the scheme from next April’ and although members may have looked at the two options provided and thought it doesn’t seem too bad we should all be very clear about these changes and that they are just the beginning of a raft of proposals which will ultimately see our schemes value and sustainability greatly diminished over a period of several years.
Options 1 and 2 are designed to achieve short term savings of £900million by 2015 and what the Director does not point out in his message is that these initial changes also include an increase in the normal pension age to 66 meaning that most staff will have to work an extra six years before being able to collect their pension.
These initial changes should be viewed in the context of the wider recommendations made by Lord Hutton in his ‘Independent Public Service Pension Commission Report’ which can be viewed here: http://cdn.hm-treasury.gov.uk/hutton_final_100311.pdf
Hutton has made many recommendations which the current government have accepted in principle and seem keen to implement. For example recommendation 7 in the report sets out:
A new career average revalued earnings (CARE) scheme should be adopted for general use in the public service schemes.
Although Hutton is clear in other recommendations that benefits already accrued should be protected for anyone who has years left to work the move to a career average scheme will undoubtedly significantly reduce your benefits in the longer term meaning you will be paying more money each month for less of a pension in your retirement. Indeed inflation alone means that even if you remain on your current grade for your whole career you will earn significantly more by the time you retire than when you started. For example I earn £29571 per annum (SO1) however that same grade in 1994 was worth just £19077 as inflation goes up so too do our wages (although not so quickly) and therefore the effect of inflation alone on our earnings in the course of our careers would have a massive impact on our pensions.
Other recommendations include barring those who transfer to new employers as a result of privatisation from joining the LGPS. Members should think about this for a moment especially those who have experienced being TUPE transferred in or out of the council in the past. For example if this rule applied now it would mean that hundreds of workers in Housing would not have had access to the LGPS when they worked for private estate cleansing or housing management firms. The impact on staff at a time when privatisation and transfers are more likely could be massive as it would mean there would be no obligation on private firms touting for public sector contracts to offer a comparable scheme.
Finally we should take a minute to consider some of the facts provided in the Director’s Pensions Briefing for staff. The Council is indeed spending more on pension benefits now than it was in 1997 however members should be aware that this increase if broken down over a period of the 12 years shown on the chart provided represents an annual increase of around 5.1% per year. In August of this year the Retail Price Index measured inflation at 5.2% so basically the increases year on year it
could be argued are roughly in line with inflation. If we then compare this figure of £15.4million increase over 12 years and consider that this has been used to pay the pensions of public servants and compare that with the figure spent on the top 60 consultants in 2008 which was around £6.8 million we believe this increase can be easily justified.
So the message from Unison is clear the Government is proposing to change your pension, the very same pension you signed up to when you started. For the most of us public service will not make us rich and the on average we already earn less than our counterparts in the private sector (£22 per week less and that includes your pension!). This will mean you will pay more for longer for less when you retire.
This is just the start of the attack on our pensions and so members should be careful to cross check all the facts about the proposed changes before accepting the ridiculous notion that we should have to pay for the unsustainable policies of past and present governments and the propping up of a failed economic system.
Members wishing to look at the Department of Communities and Local Government consultation letter can do so here: http://www.communities.gov.uk/documents/localgovernment/pdf/2004147.pdf
Local Govt. Branch
020 8356 4062