Call emergency union meetings to rebuff pensions sell-out!

Submitted by martin on 19 December, 2011 - 11:00

Public sector union committees, branches, and workplace groups should call emergency meetings to reject the sell-out on pensions outlined at the TUC public sector group meeting on 19 December.

The Government has not shifted a millimetre on any of its three main plans for public sector pensions. [Click here for the Government's official announcement.]

  • a 3.2 percentage point increase in contributions by 2014/2015: the Government has already announced that the increased contributions will start for teachers and civil servants from April 2012;
  • pegging the pension age for public sector employees to the state pension age, which will increase to 67 by 2026 and then on to 70, faster than was planned when the talks on public sector pensions began;
  • switching the uprating of benefits from the RPI rate of inflation to CPI, which runs about 0.8% lower, reducing the value of a pension by 15% after 20 years. The Government has already introduced this shift, from April 2011.

The RPI-CPI switch gives a twist to the fourth main Government aim: switching all public sector workers to career-average from final-salary schemes.

A switch to career-average is not necessarily bad. But it all depends on the details of the inflation rate at which bygone years' wages are upgraded to calculate the average, and on the "accrual rate", the percentage of career-average acquired by each year's contribution.

The civil service union PCS points out: "Career average salary is calculated by taking a percentage of each annual salary and up-rating it by inflation. By cutting the inflation indicator from RPI to CPI, the government at a stroke reduced the value of... [career-average] scheme[s]". Only with a much better accrual rate can a career average scheme be as valuable as a final-salary one. There is no sign of that.

In short, public-sector workers will:

  • have more taken out of their pay in pension contributions - £100 a month more for even middle-range workers, on top of the continued cuts in real wages recently announced by the Government;
  • have to work longer for their pensions, often much longer: workers who can now retire at 60 may have to work until 67 as early as 2026;
  • get worse pensions.

What's new? On 19 December a number of union leaders, without consulting even their union executives, effectively, via the media, told the principal personages of the pensions drama, the rank and file workers and the Government, that the campaign was over. Why?

The details of the Government statements are below. Neither Unison nor any other union leadership endorsing the "heads of agreement" has given any detailed independent information to its members. The BBC summarised it like this:

  • 530,000 staff earning between £15,000 and £26,557 would be spared any rise in pension contributions next year. (But what about the following years? The Government's baseline of increasing contributions by 3.2% overall remains unchanged. This is just divide-and-rule juggling with who pays more than 3.2% and who pays less. Also, a backhanded concession of this sort was signalled well before 30 November.).
  • So would those less than 10 years away from retirement. (It looks as if the BBC has garbled this. No Government statement makes this promise. Probably the BBC has garbled the Government's 1 November concession that those fewer than 10 years from retirement would see their pensions unimpaired except by the RPI-CPI switch, though they would have to pay increased contributions).
  • Staff in areas transferred out of the public sector will retain their right to stay in the pension scheme. (That's good, but is a concession announced a while back, in the run-up to 30 November).
  • Improved accrual rates (the fractions of career-average pay you earn for each year's contributions). These are 1/54 for the NHS, 1/44 for the civil service, 1/57 for teachers. (But these improvements are not sufficiently better to "balance" the move from final salary to career average as the amount of which you "accrue" fractions, and the method of calculation of career average which ensures a low figure. The Government is explicit about that: "the accrual rate has been improved. This has been offset by lower revaluation of accruals...".)

Unison says that in local government there "will be no contribution increases for employees before 2014". There is not even a suggestion that the average contribution increase after 2014 will be less than the Government planned.

No union leader claims to have an actual agreement. Dave Prentis of Unison, and others, are calling off action on the alleged grounds that they have a basis for negotiations.

TUC secretary Brendan Barber said on 19 December:

"In health and local government... key principles for further negotiation in heads of agreement will provide the basis for further talks in the New Year... It's important to stress that no agreements have been reached, but unions now have proposals to put to their executives and members... The emphasis in most cases is in giving active consideration to the new proposals that have emerged rather than considering the prospect of further industrial action".

Unison talks of a "consultation" with members, but does not say "ballot". The union leaders may say that since they do not have a detailed deal, but only a "basis for talks", they can abandon the fight without even balloting the members, or, at least, without balloting them until the fairly distant time when they do have a detailed deal.

The headline media reports - that is, the story as received by the big majority of public sector workers - are that most unions have accepted the Government terms, quit the campaign, and settled down to negotiate fine detail.

A closer look at union statements [below] indicates that most unions have not quite accepted the Government terms. That means the sell-out can be stopped. It also means something else, though.

A firm stand by just a few combative unions - or even just PCS and NUT - could push the Government back even if every other union drops out. Those two unions alone have enough clout for that.

If a few unions take a firm stand, then they will probably rally others, such as the Unite health sector. If they only demur from full-scale capitulation, have their officials weaselling that they haven't really accepted the Government terms yet, and simultaneously but silently signal doubt about further action, then the weight of media and Government pressure will demobilise workers.

From that angle, even the stand of the PCS leaders is too weak. PCS declared that "the offer on the table in the civil service is not good enough and... the union believes further industrial action should be organised as early as possible in the new year if the government continues to refuse to negotiate on the core issues".

"Believes further action should be organised" is much weaker than "will organise further action", or even "proposes further action". And, rather than the action being necessary until the government concedes decent pensions, according to the PCS leaders it is necessary only until the government "negotiates on the core issues" (even if it negotiates without giving substantial ground?)

If this sell-out goes through, it will give a go-ahead signal to the Government to redouble attacks on pay and jobs which are going through with minimal resistance, and probably to supplement them with outright attacks on union organisation, of the type seen with the dispute at Langdon School in Newham and with the victimisation of Northampton NUT secretary Pat Markey.

Those attacks can only be fended off with the sort of ongoing, self-controlling campaign conducted by the NUT members at Langdon School, scaled up to national level.

The union leaders and the Government have chosen Christmas as the time for the sell-out, hoping that they can get it through without reaction from the rank and file, and that by the time union meetings assemble in January, the weight of media coverage will have made the end of the pensions campaign a fait accompli in the minds of union members.

Public sector union committees, branches, and workplace groups should call emergency meetings now!

They should also call for an emergency conference of the rank and file across the public sector unions.

PCS Left Unity, the dominant faction in PCS, has called a meeting for 7 January (11:00-16:00 at Friends House, Euston Road, London), and invited activists from other public sector unions to come too. That is good; but we need to do more than just back this meeting.

Although the publicity for the meeting says that it will be about "organising, not just debating", it also worryingly suggests that it could be dominated by vague though militant-sounding speeches from the top table. Its headline, "Name Day For National Strike", suggests that it could be limited to boosting one further token one-day strike by PCS to burnish PCS's militant credentials, and that's all. The "organising, not debating" line could be used to stifle any discussion of broader plans for action.

Only a continuing, self-controlling, and multiform campaign will push the Government back. A determined minority of unions could generate that campaign, and generate enough pressure inside the other unions to make their lay committees overrule their top officials' desire to capitulate. Time is crucial here. A wave of rejection across the union movement has to be set going now, without waiting until 7 January, and provide the impetus for real organising and real debate on 7 January.

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Submitted by martin on Tue, 20/12/2011 - 11:54

Gill George from Unite's Health Sector National Committee posted the following to the healthactivists list. This is a model for what other members of public sector union executives should do. We must find ways to hold emergency meetings at all levels of the movement to discuss the proposals and assert some democratic, lay member control over our dispute.

An excellent telephone conference took place this afternoon of Unite’s Health Sector National Committee, to decide our position on the Government’s latest pensions offer.

The Officer responsible for Health Sector pension negotiations outlined the (extraordinarily trivial) concessions that the Government has made. She also advised us of the Government’s threat that if the ‘deal’ was not signed up to within the next 90 minutes, a worse outcome would be imposed, and any union not agreeing would be excluded from all future negotiations. What we were asked was if we would sign up to a ‘Heads of Agreement’ letter that accepted the principles of the Government’s offer and make a commitment to call off any further strike action.

So what’s on offer? Accrual rates have been increased to 1/54. ‘Fair deal’ provisions will apply to anyone transferred out of the NHS and to subsequent TUPE transfers. The (partial) protection for people within ten years of normal retirement age remains. There’s some tapering protection introduced to cover an additional 2 ½ years.

There’s no movement on the NHS pensions not being payable until state retirement age – now 67 for most, and increasing to 68 in the future. No movement on the change from RPI to CPI, with all the losses around that. No shift in the loss of final salary pensions and the introduction of a career average pension, to the major detriment of many women and anyone with an irregular employment history. Pensions contributions are to go up as planned in 2012, with future years still the subject of consultation. On a whole number of key areas, there had been no change at all.

The feeling amongst NISC members was close to unanimous. We were clear that nothing fundamental has changed – we’re still being asked to work longer, pay more, and get less. The overwhelming view was that November 30th had been great, our members had always known one day would not be enough, members were asking what we were going to do next – and would feel totally let down if Unite capitulated. Several said that members would leave the union. We understood that if we blink first on pensions, it’s an open door for all the other Tory attacks coming our way – 710,000 public sector jobs going, two more years of pay cuts, the attack on national pay bargaining and so on. Several of us talked about Unite giving a lead within the NHS and the wider public sector, with opportunities for new alliances; others felt we would go it alone if we had to.

The consensus was clear, and was summed up by one participant: ‘It’s the overwhelming view - no, that deal is not acceptable’. We strongly rejected the ‘Heads of Agreement’ letter.

This was a good discussion, with a good outcome – one positive strand within a multi-layered battle that is taking place today. I genuinely don’t know and wouldn’t want to guess what’s happening more widely.

Submitted by martin on Tue, 20/12/2011 - 12:02

GPs in the BMA have also rejected the terms from the Government.

Submitted by DB on Tue, 20/12/2011 - 12:55

Here's a video response to Unison and Dave Prentis's decision to capitulate. Prentis has been itching to make a deal with the government for months.

Submitted by martin on Tue, 20/12/2011 - 13:18

Click here for the Government's official announcement.


  • "In all cases the... cost ceilings set on 2 November 2011 remain unchanged and no additional money has been made available". The basic picture of taking more out of public sector workers' wages and paying worse pensions later is unchanged. All the modifications are a matter of shifting losses around between different section of public sector workers.
  • "The accrual rates... has been improved. This has been offset by lower revaluation of accruals prior to retirement linked to prices rather than earnings... This has meant no extra cost to the taxpayer". In other words, your accrual rate (the % of career average that you earn for each year's contributions) has improved, but that is fully offset by the fact that the method of calculating your career average has worsened.

Submitted by martin on Tue, 20/12/2011 - 13:35

On 2 November the Chief Secretary to the Treasury made a Statement to the House setting out an improved offer on public service pensions to public sector workers (Cm 8214). This offer provided a more generous cost ceiling for scheme-specific discussions to work within, and protected all those within ten years of their pension age from any further change. This generous offer was conditional on the Government and trades unions reaching agreement by the end of the year, including in the Teachers’ Pension Scheme, bringing to a conclusion talks that have lasted since February 2011.

Since 2 November I have been engaged in detailed and intensive talks with the teacher and lecturer trades unions and employer representatives. I can now report to the House on the heads of agreement on the scheme design for the Teachers’ Pension Scheme to be introduced in 2015, on which talks have concluded. The government have made clear this sets out their final position on the main elements of scheme design, which unions have agreed to take to their Executives as the outcome of negotiations on the main elements of scheme design. This includes a commitment to seek Executives’ agreement to the suspension of any industrial action on pension reform while the final details are being resolved. Further detailed work will take place in the New Year and Executives will consult members as appropriate.

The agreement includes changes to the Government’s reference scheme to reflect the priorities of the teaching profession in relation to early retirement and other issues, consistent with the need to remain within the Government’s overall cost ceiling.

The agreement reached allows for further discussions on variations to the balance between the accrual rate and the CARE revaluation factor within the limits of the Government’s cost ceiling.

The core parameters of the new scheme are set out below:

a. A pension scheme design based on career average;

b. A provisional accrual rate of 1/57th of pensionable earnings each year, and the resolution of outstanding issues not covered by this agreement.

c. Revaluation of active members’ benefits in line with CPI + 1.6% .

d. Normal Pension Age equal to State Pension Age, which applies both to active members and deferred members (new scheme service only);

e. Pensions in payment to increase in line with Prices Index (currently CPI);

f. Benefits earned in deferment to increase in line with CPI;

g. Average member contributions of 9.6%, with some protection for the lowest paid;

h. Optional lump sum commutation at a rate of 12:1, in accordance with HMRC limits and regulations;

i. Spouses/Partner pension in accordance with current provisions;

j. Lump-sum on death in service of 3 times FTE salary;

k. Ill-health benefits the same as those in the current open scheme;

l. Actuarially fair early/late retirement factors on a cost-neutral basis except for those with a NPA above age 65, who will have early retirement factors of 3% per year for a maximum of 3 years in respect of the period from age 65 to their NPA; and

m. An employer cost cap to provide backstop protection to the taxpayer against unforeseen costs and risks.

The Government Actuary’s Department has confirmed that this scheme design does not exceed the cost ceiling set by the Government on 2 November. Copies of the heads of agreement and GAD verification have been deposited in the Libraries of both Houses.

Submitted by martin on Tue, 20/12/2011 - 13:41

Click here for the Written Ministerial Statement.

Click here for Unison briefing setting out the unions' position; it consists of a short preamble and the joint statement with the local government employers.

In essence:

  • The unions are demanding that the new pension scheme be introduced quicker than the Government wanted, in 2014 rather than 2015. The point of this is to get the changes in place before the scheme is "revalued" and thus avoid a "revaluation" which declares the scheme in deficit. The issue arises because the Local Government Pension Scheme works through a "fund", a distinct pot of money into which workers and local authorities pay, which is then invested, and out of which pensions are paid. The teachers', civil service, and health schemes have no "fund". Workers' and employers' contributions go into, and pensions are paid out of, current Government revenue.
  • The unions accept three of the key demands of the Government. Pensions will be uprated for inflation by CPI rather than RPI. The pension age will rise along in line with the state pension age. Final-salary pensions will be replaced by career-average pensions.
  • The Government is also confident that the whole thing will be negotiated within its desired "cost ceiling" (though this issue does not arise with the Local Government Pension Scheme in the same way as with the others, since the scheme's revenues and payments are outside the Government's budget).
  • The unions' great hoped-for prize is that there will be zero contribution increases until 2014, and maybe zero or "minimised" contribution increases after then. (If the Government and the local government employers say in 2015 that contribution increases are unfortunately necessary after all, what position will the unions be in to fight that? A very weak one). Presumably the unions negotiated around the fact that the local government scheme already has a much higher rate of "opting out" than the others, so increased contributions, by increasing "opt-outs" even more, could worsen rather than improve the financial position of the scheme; and anyway, the contributions increase (or no increase) makes no difference to the Treasury, because the scheme's revenues and payments are outside the Government's budget.
  • The Unison document refers to an accrual rate of 1/60. Slightly better accrual rates have been conceded by the Government for the three other big schemes. But a career-average scheme needs a better accrual rate than a final-salary scheme to be of equal value (since even the least-promoted will generally have a final salary higher than career-average); and a career-average scheme depends for its value also on how the "average" is calculated, that is, how bygone years' pay is inflation-adjusted for the purpose of averaging. In other schemes the Government's "heads of agreement" include very poor inflation-adjustment calculations. In short: if the contribution increases in local government are small or even zero, that will be paid for with worse pensions.

Submitted by martin on Wed, 21/12/2011 - 07:41

In health, Unite has rejected the "heads of agreement". But "the British Association of Occupational Therapists, British Dental Association, British Dietetics Association, British Medical Association, British and Irish Orthoptic Society, Chartered Society of Physiotherapy, Federation of Clinical Scientists, GMB, Hospital Consultants and Specialist Association, Managers in Partnership, Royal College of Midwives, Royal College of Nursing, Society of Chiropodists and Podiatrists, Society of Radiographers and UNISON" have "agree to take [the Government plan] to their relevant executive bodies as the best that can be achieved by negotiations".

In local government, Unite and GMB have signed joint statements with Unison. They endorsed the "heads of agreement" and then suspended their endorsement in protest at a provocative letter from Eric Pickles.

In the civil service, PCS has clearly rejected the "heads of agreement". The FT reports that in retaliation "Cabinet Office insiders said the PCS would not be invited to further discussions on details of the reforms".

NIPSA, the Northern Ireland public service union, has declared: "NIPSA firmly rejects what is on offer as capable of providing for a fair solution to the dispute".

FDA has put out a statement offering its members little information, but a squalid sneer at PCS. "In the civil service, the FDA - together with Prospect and GMB - have... indicated [that] they were prepared to consider an outline of a new scheme as a basis for further negotiations... The Prison Officers' Association also wants to continue in the negotiations. Unite has stated that it 'wants negotiations and discussions to be positive and to reach a successful conclusion'. However, PCS appears to have rejected the proposals".

Prospect says it "has suspended industrial action for the duration of the talks [but] it has reserved the right to take further action if the talks break down". "Although the Cabinet Office sought to make continued participation in the negotiations conditional on acceptance of what it termed 'the main elements of scheme design', Prospect has undertaken to convey the outcome of the talks to [its] Civil Service Sector executive" (and, it suggests, though evasively, it has undertaken no more than that).

And the POA says that: "the POA would not endorse the 'Heads of Agreement' as outlined in [the Government's] formal offer until there has been a suitable conclusion to our negotiations on the normal pension age".

In education, the teachers' unions NUT and NASUWT have taken a halfway position. NUT general secretary Christine Blower announced: "the NUT was not able to sign up to the Government’s headline proposals. There was insufficient progress..."

But her statement was headlined not "campaign continues", but "talks to continue in the New Year".

ATL has endorsed the "heads of agreement". NAHT has done the same in a mealy-mouthed way. "We have reached a point where we have produced some 'parameters' for the pension scheme which we believe exhaust the full potential of negotiations at this stage [and] are worth putting before our National Executive and members to see what you think... We will not escalate any industrial action while this process takes place".

The Scottish teachers' union EIS has made no statement.

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