Willie Duffy

Regional Organiser

UNISON PENSION BRIEFING

Don’t panic – nothing is going to change immediately

Negotiations with UK government are continuing until October

The Scottish Government issued a consultation paper over proposals to increase employee contributions.

No increases in contributions until April 2012 There is commitment not to reduce benefits earned

before the date of any change in the schemes. Changes to schemes likely to be for benefits earned

after 2014/15 Don’t opt out

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

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

Scheme contribution increases Retirement age increases Benefit changes to career average

The Key Issue – Contribution Increases

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

Not one penny of the money will go into the scheme It threatens the whole system – if enough members opt-

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

scheme It could allow public sector unions to co-ordinate

action We need to consult members and prepare for a ballot

for industrial action

Contribution Increases

The Government announced in the CSR a cut in funding to PAYG schemes of £2.8 billion a year by 2014/15

This equates to just over a 3% contribution increase on average for members

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

What are the current NHSPS contributions?

If your whole time pay rate is: You pay a contribution rate of:

Up to £20,709 5%

£20,710 to £69,392 6.5%

£68,393 to £107,846 7.5%

£107,847 + 8.5%

Table 1: Proposed increases to contribution rates (before tax relief)

Table 2: Contribution rates (after tax relief applied)

The Move to CPI

The Government has changed the increase in public service pensions from RPI to CPI from April 2011

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

The OBR predict that pensions will be 8.5% less by 2017

Lord Hutton says move represents a 15% cut in benefits

The Implications of CPI

Pensions are likely to increase from April by 3.1% this year when otherwise would have increased by 4.6%

A woman on the median NHSPS pension of approx £3500pa will be around £53 worse off

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

The possible move away from a final salary scheme

Lord Hutton stated in his Interim Report of 7 October 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 pension earned should increase in line with increases in average earnings

What is a CARE scheme?

This is a scheme that rather than base benefits on final salary bases them on average earnings over a scheme membership

Such a scheme could potentially benefit members whose annual salary increases are generally less than inflation and who are unlikely to benefit from regular promotions

The devil is in the detail however and UNISON is not necessarily against a CARE scheme as long as it’s not a clear cost-cutting exercise

The new scheme for civil servants is a CARE scheme

Increasing Retirement Ages? The Government has already brought forward

the State Pension Age (SPA) equalisation date meaning that from April 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” NRA’s should increase in line with SPA

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.

Pensions ballot - timetable

28 September – ballot notices dispatched to all employers being balloted

11 October – ballot for industrial action over pensions opens

17 October – if members have not received ballot paper, they can phone UNISONdirect to request one until noon on 31 October

3 November – ballot closes at 10am

30 November – day of industrial action, plus city centre rallies of support

Where can you find everything?

Scottish Pension Web Pageshttp://www.unison-scotland.org.uk/pensions/index.html

UK Campaign Web Pageshttp://www.unison.org.uk/pensions/protectour.asp

Advice on Pensions

http://www.unison.org.uk/pensions/index.asp