Pensions, Pay and Privatisation
Why healthworkers should reject the NHS Pension proposals
With accusations still flying around that it was overly generous pay deals that led to the current financial crisis in the NHS it might seem a little selfish for staff to be worrying about their pensions when the future of the NHS itself now seems to be at stake.
But the issues of pensions and pay for NHS staff are closely tied to the privatisation agenda. One thing the big corporations are fearful off when taking on NHS staff is liability for ongoing terms and conditions, wages and pension payments. Whilst these remain a commitment protected by TUPE legislation the government looks for ways to sweeten the pill for their private sector partners.
For instance in NHS Logistics, recently handed over to DHL, it is reported that to lessen the pension burden the depots out of which they operate will be sold onto a third party with the money realised being used to fund future pension provision. This limits the cost to DHL but given the record of this type of arrangement in PFI deals probably increases the cost to the public purse.
In the same way one of the major motivations behind the whole Agenda for Change deal was to provide a system in which claims for equal pay from historically low paid mainly women workers would be limited.
Last year's deal on Public Sector pensions was hailed as a victory by union leaders as it guaranteed the rights of those already working to full entitlement of their current schemes without any increases in the age of retirement. As Solidarity warned at the time this was at best an inadequate deal for present staff as the government would still be looking to cut costs. The fact that new starters would have to start in different schemes with less favourable terms and a raised retirement age made it unacceptable to us.
As predicted the government have now come back with an offer that for existing staff to maintain their current rights they will have to pay more. For the majority of staff this will be an extra 0.5% raising their contributions to 6.5% of their annual salary. Some, estimates are about 100,000, lower paid (those earning less than £15,000 p.a.) will pay 1% less than currently and a few higher earners (with an annual income above than £60,881) will pay 1.5% more. There are various welcome benefits introduced to give partners rights and new flexibility on the ability to take a lump sum at the cost of a reduced annual pension.
Whilst it looks on the surface like the introduction of some progressive contributions system in which the wealthier pay more this is offset by the fact that tax relief on the higher band is 40% as compared to 22% for regular tax payers. Also there are no guarantees that there will not be any further rises in employee contributions if more money is needed to fund the scheme in the future. The proposal includes a cap on employers contribution, i.e. that of the government, at 14% so any extra costs are expected to come wholly out of the workers pocket. Reading the small print shows that in the event of any surplus the government is more than happy to take half of any refunds available.
The scheme for new starters is presented in alluring terms with many throwaway benefits but nothing can hide the fact it will mean working longer (at least to 65), paying more for the privilege and getting less. It also ignores the fact that most of the positive improvements have been forced on the schemes because of changes in legislation - which means that we'd get the good stuff 'imposed' on us, even if we rejected the package currently on offer.
Yet most of the unions are claiming a victory in that both the current right to retire at 60 and the final salary scheme are preserved. UNISON, AMICUS and GMB have all published press releases in which the extra costs are pushed into the small print or spun into something else entirely. For example AMICUS concedes that to secure the new scheme and make an agreement for the old scheme "There is a price to be paid... in terms of a slight overall increase in member contributions but that increase has been distributed in line with employees' incomes which makes the Scheme overall much fairer."
This is dishonest - a percentage contribution to pensions is already 'fair', in that everyone pays the same proportion of their salary into the scheme. To present an increase in contributions for most staff as a 'redistribution of wealth' can only make sense if you consider that the Government (and its friends in the private sector waiting to take over NHS Trusts when their money runs out) are deserving poor who need bailing out by high-earning nurses and other healthcare workers.
The unions' complacency is also not dealing with the reality of pensions and their general crisis. For example, the BBC reported in June, that average employee contributions to final salary schemes in the private sector are now at an average of 5.2% of salary and increase of .6% on the previous year. This was coupled with a prediction of a further increase of at least another 1% in the next two years. Thats the reality you'll pay more and in some cases work longer and the bosses cap their contributions or just close the scheme.
That's the model New Labour is following. In the short term limiting employer contributions means saving the Treasury money, in the future it will be a guarantee to the Healthcare multinationals that their liabilities will be limited. Altogether it adds up to a further wage cut for no longer term gain in pension. Together with Gordon Browns announcement that public sector pay rises will be limited to 1.5%, increases in inflation and interest rates and spiralling energy costs most NHS workers can expect to see a cut in their living standards in the next few years. The price for New Labours commitment to the market and opening up public services to privatisation will be paid by the ordinary workers with the only benefit being the vast profits that will be realised by shareholders in the partnership companies.
The fight to defend pensions is therefore intimately linked to the fight against privatisation and should be fought without any guilt about defending relative privileges or as the government spins it employee bias. Having a decently paid workforce with adequate pension rights is as vital to the future NHS as any efficiency saving.
Unfortunately it seems most of the unions are prepared to accept the deal without a ballot of their members. UNISON is an exception, with a ballot ongoing in November.
However, the UNISON material for the ballot is shocking, even by their own standards. In the mailing with the ballot paper is a letter from General Secretary Dave Prentis, urging members to vote YES, but not mentioning a single aspect of the new scheme, either good or bad, and an advert for a promotion the union is running to encourage members to recruit their friends a win a holiday at the UNISON holiday camp in Croyde Bay.
UNISON activists concerned about this lack of information will have turned to the two-page article on the deal included in the current issue of 'In Focus' - the union's magazine for activists. But they'd be even more confused after reading this, as it misrepresents the figures and declares that the 6.5% contribution rate is "unchanged" for most members, when in fact it is an increase of half a percent, and that the 5% contribution rate is "a cut" for most low paid members, when it is what they will already be paying. Mis-selling a pension scheme used to be a criminal offence, but it seems the UNISON leadership think they're immune from prosecution.
UNISON should be concerned - conducting such a feeble attempt at consultation will only alienate its membership when the truth about the pension scheme leaks out, and the current hostility union reps are reporting over the union's complicity in Agenda for Change will be muted by comparison. And no doubt the unions which have not bothered to even ballot their members over the pensions proposals will be able to hide behind UNISON's ballot result, and blame the bigger union for accepting the deal, if their members object down the line.
Time is short, but UNISON members - and other healthworkers where they can - should protest to the union about the way the ballot has been conducted, and demand that a re-run ballot takes place with accurate information provided to all members. In the meantime, we must tell members the truth about the proposals, and encourage them to reject the NHS pension package.