Fight these pension cuts!

Submitted by Matthew on 16 March, 2011 - 6:14

John Hutton has produced his final report on the future of public sector pensions. But even before the report, according to the TUC, the value of these pensions had been reduced by 25 per cent due to a mix of negotiated changes and the government’s arbitrary switch to the Consumer Price Index as a measure of inflation.

But other Hutton recommendations will worsen the situation.

The recommendation to end final salary schemes and increase the Normal Pension Age (NPA) for all staff to 65 will impact badly on existing and future public servants.

Unfortunately public sector unions have already agreed that all new entrants after 2007 would have an NPA of 65. In a Radio 4 interview Hutton thanked them for agreeing to this!

The ending of final salary schemes and their replacement with Career Average Schemes (CASS) takes us into the realm of “known unknowns”. Those staff who are not promoted or only get one or two promotions during their career could be better off with a CASS, depending on the accrual rate. That is if the NPA remained 60.

The Hutton report does recommend one good thing — that rights in relation to pension benefits accrued (earned to date) should be protected.

Of course the Government could ignore Hutton’s recommendation or they could protect rights in a way that reduces them in practice.

What should the unions argue and campaign for?

The key demands have to be on the change in the indexation measure (over which retired members can be mobilised as well) and increased contributions.

We must insist on fairness. For a cap on the pension earnings of senior managers. The NPA must be 60 for all (55 in certain parts of the public service) and regardless of when a person joined the public sector. We are not in favour of a two-tier work force.

There has to be absolute protection for accrued benefits (subject to the cap on senior management payouts).

Whether future pensions be final salary or not is a matter of technical detail (for example around accrual rights) but we should be clear that the lower paid must get a better deal (in proportionate terms) than those better off.

Pensions should be progressive and redistributive. This could mean guaranteed minimum pensions. Indeed, why doesn’t the government use some of the 25% drop in the value of public sector pensions to craft a better deal for those on lower incomes?

We need to address equality issues such as for (mainly) women who interrupt working with caring responsibilities.

The unions have to take on the argument that the country cannot afford the current level of expenditure on public sector pensions.

We have to attack the notion that people are living too long and this makes pensions “unaffordable”. The unions can do this (partly) by bringing out the great variation in death rates; with those on low pay/doing repetitive work having high death rates and lower average age of death than those in better paying work.

The increases in NPA deprive many workers of most (and in some cases, all) of their retirement years.

Finally we have to ally the fight for jobs and service with that for pensions.

Hutton argues that his proposals are driven by cost and affordability. This is a lie. Indeed buried in his report is the admission that the cost of public sector pensions peaked in 2010-11 at 1.9% of GDP and is expected to fall to around 1.4% by 2059-60.

Hutton repeatedly refers to pensions as a major barrier to public sector reform and private sector involvement in provision. So the real pensions crisis is the lack of decent provision in the private sector.

Rather than seek to address that, by for instance levelling up private pensions to the best public sector provision, ex-Labour minister Hutton wants to bring public sector pensions down to a level that is acceptable to private companies. The same companies which now have their eyes on education, health and other state services.

A PCS activist

Commit the unions to act together

The Hutton Report contains not much that is new. For instance, the 50% increase in teachers’ pensions contributions we already knew about. So during a period when pay will be frozen a newly qualified teacher will lose an extra £50 per month from their salary.

Hutton has also said that the Normal Pension Age should follow the rise in the state pension age. This will be 66 from 2020 and rise to 68 after that. Judging by the NUT’s membership, around 40% of teachers are under 35 so a huge cohort of people will have to stay in the classroom until they are nearly 70.

A motion calling for action on pensions will be discussed at the union’s Annual Conference in Harrogate at Easter. Soon after, a ballot for discontinuous strike action by all members in the pension scheme should take place. This will involve all state schools including academies, sixth form colleges and centrally-employed staff.

There is a possibility that one or both of the other teacher unions will agree a similar emergency motion to their conferences and the same timetable for a ballot and action. We expect that the college lecturers, who are already balloting on pensions, and the civil service union PCS will also agree to co-ordinate industrial action with us.

But union activists have a role to play here in all the unions. We need to secure a commitment to a specific ballot timetable and action strategy and then that members are mobilised to support the action.

The government have made clear they are not going to be moved by negotiation on increases in contributions and are ploughing ahead with the change to pensions indexation.

On the other hand there are a number of unions who, despite months of discussions and efforts to persuade, cannot seem to see the urgency of this issue. Enough is enough. It is time for those unions with self-professed left leaderships to mount a serious challenge to this attack.

Further delay will embolden the government and reinforce feelings of helplessness among union members. But a move to action will present the wider trade union movement with the fundamental choice — are they going to simply talk about defending pensions or are they going to act to defeat these proposals?

Pat Murphy, National Union of Teachers National Excutive, personal capacity

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