THERE COMES A TIME WHEN ENOUGH IS ENOUGH
UNISON will be balloting members for industrial action over the threat to your pension.
If you’re eligible for the local government pension scheme, NHS pension scheme or civil service pension scheme then in the next month you will receive a ballot paper. UNISON is urging members to vote ‘yes’ to industrial action.
What you can do now:
- Read the email announcement about the ballot by UNISON general secretary Dave Prentis: Vote yes for industrial action on pensions
- We need everyone to get involvedin the campaign to protect our pensions – whatever time you have, whether it’s five minutes, half an hour or more.
- Talk to your colleagues and get them to join UNISON to strengthen our voice.
Queries about the pensions dispute – pensionsdispute@unison.co.uk
Protect our pensions
Public sector pensions are again making headlines as politicians plan to make us work until we drop.
The proposals mean that we will pay more, work longer and get less while bankers continue to rake in millions in bonuses.
And the money that gets taken from you won’t go towards improving your pension schemes, but is being used to pay off the deficit caused by bailing out the banks.
UNISON is leading the campaign to protect our pensions because we don’t believe public service workers should be forced to pay what is in reality an extra tax. We think everyone deserves a decent pension.
Find out more about the threats facing our pensions here
Your Branch will set out its plan of action next week on Wednesday. Please visit the website.
6 September 2011
UPDATE ON LGPS NEGOTIATIONS – ENGLAND AND WALES
OSBORNE’S DEVASTATING PENSION RAID
The three NJC unions – GMB, UNISON and UNITE- met with the political leaders of the Local Government Group (LGG) – once the LGA – on Friday 2 September. This was the third meeting called to respond to the letter sent to the LGG by Secretary of State Eric Pickles, asking them to meet the unions with a view to making joint proposals for ways of ‘saving’ £900 million from the Local Government Pension Scheme (LGPS).
This newsletter outlines the arguments that the unions have made to the employers. We have demonstrated that there is no need for further savings to the LGPS.
Background
In October 2010, the Chancellor, George Osborne, announced that he intended to apply the 3.2% tax on public sector pensions to the LGPS. As unions we believe that this tax is unnecessary and has been imposed to keep Council Tax down, rather than make the LGPS sustainable for the future.
Facts
The LGPS is funded, has £165 billion in assets and currently takes in over £4 billion a year more than it pays out. George Osborne’s new tax – which is apparently intended to keep Council Tax down – threatens to bring the 90-year old scheme crashing to the ground as hundreds of thousands of scheme members face being priced out of their pension scheme. This in turn would cause LGPS income to dry up, putting unsustainable pressure on council tax and local authority budgets. As unions we have repeatedly called on the Coalition government to change its approach. The employers and LGPS funds have also joined with us in doing so and share our concern that opt-outs from the LGPS could result in damaging pressure on the scheme.
Instead of defending the LGPS, the Secretary of State for Local Government, Eric Pickles, has gone even further, insisting that the £900 million to be taken from the LGPS in England and Wales must be in addition to the savings already being generated by the scheme.
The Unions’ Arguments
Both government and independent assessments demonstrate that the current savings in the LGPS far exceed the 3.2% savings the government is seeking. In the separate discussions with the government and the Local Government Employers, the unions have been highlighting the fact that the cost of the LGPS is already reducing as a result of:
The Falling Cost of the LGPS 2008
A number of changes were made to the LGPS in 2008. When introduced, the future service cost (the cost of pensions currently being built up) of the LGPS 2008 was 20% of payroll. Over time, the Treasury’s own Actuary expects this to fall to less than 18%. The employers will enjoy the entire benefit from the reduction in cost – in cash terms a £600 million reduction.
Benefit Indexation Change – RPI-CPI
The cut in the indexation of LGPS benefits from the Retail Price Index (RPI) to the Consumer price Index (CPI) results in two savings for the LGPS (as it does for all funded pension schemes). Firstly, the average annual cost of pensions being built up reduces by 1.23%. In cash terms this reduces the annual cost of the LGPS by £375 million. Secondly, the cheaper indexation reduces the cost of the pensions already built up to an average of 2% for the next 20 years. In cash terms this has reduced the employer contributions to the LGPS from April 2011 by £600 million.
Pay Freeze
Unlike the rest of the public sector, local government pay has been frozen for two years and the freeze has been absolute – with no £250 increase for the lowest paid. In fact, many council workers have had reductions in pay. This means there are savings for the LGPS which are equivalent to around 1% of payroll – £300 million in cash terms.
Job Losses
Thousands of people have already lost their jobs in local government and redundancies are likely to continue. A conservative assumption is that there will be a 10% reduction in the workforce covered by the LGPS. This will further reduce the employers’ annual pension costs by 1.4% or £420 million.
Nearly £2 billion Already Saved
Without any further change to the LGPS, the cost of the scheme is reducing from 20% to 16.4% for future service now and will drop further to 14.4% in a few years time. All these savings have benefited employers. Members are actually contributing more than was predicted when the LGPS 2008 was introduced – 6.5% on average instead of the 6.3% that was expected. The employer cost of today’s LGPS for future service is therefore heading towards 7.9%.
The reduction in cost for the employers outlined above generates immediate cash savings for them of £1.7 billion as the total employer contribution to the LGPS is reduced.
If the Osborne-Pickles LGPS tax goes ahead and scheme members are forced to generate another 3.2% of savings, the employer contribution to the scheme will fall further to less than 7% for future service (6.7%). The total cash savings will be £2.6 billion, almost three times as much as the Chancellor stated in October, with a further £600 million further savings generated in the future as the LGPS 2008 cost falls as designed.
Next Steps
The LGPS trade unions believe that these excessive cuts will cause many people currently saving for retirement to leave the scheme. This will lead to poverty in retirement for them, higher Council Tax to plug the shortfall in income to the funds and bring a once sustainable scheme to the brink of collapse.
There will be a further meeting of the CLG Policy Review Group and a meeting with the LGG this week, and all public sector unions will be meeting the Government via the TUC for further talks. We will continue to argue that the LGPS is already making more savings than the Government requires and that there should be no further ‘raids’ on the scheme.
All LGPS unions are working together to protect the scheme. Members need to make sure that they and their colleagues understand the threat their pension faces and the arguments that we as unions are making.
Please circulate this newsletter to members in your workplace
Your union needs you!
We want to have a Pension Contact in every workplace who can pass round information to colleagues and provide a link with your branch and the UNISON campaign. If you aren’t one already – volunteer now! Just contact your branch secretary or e-mail your details to protectourpensions@unison.co.uk and we will add you to our mailing list.
Model letters
Model Letter to Council Leaders
Model Letter to MPs
Councillors
Defending your pension at work
It is no secret that we are in a world where sponsoring employers are routinely looking to make detrimental changes to existing pension provision to save costs.
It is now quite rare to be able to pay into a final salary pension scheme.
With people living longer, and a rocky investment market, we can only expect this position to get worse.
We need to know when employers are trying to make detrimental changes to work pension schemes so that we can act to defend your interests.
UNISON is working to defend good pension schemes and improve and promote affordable, decent pensions for all our members, wherever you work.
We negotiate changes to improve pensions on behalf of our members, and defend the pensions of members who are transferred between employers – from the public to the private sector.
UNISON also acts to affect government policy on pensions, including state pensions and pension credits.
Local Government Pensions
For all the latest on whats happening regarding your pension, please click here http://www.unison.org.uk/pensions/lgps.asp
The New Local Government Pension and You
