Sunday, June 08, 2008

Pensions report at the UNISON NEC

The UNISON NEC meeting on Wednesday received a helpful update about the (not so helpful!) developments in relation to the Local Government Pension Scheme (LGPS), from which I shall plagiarise…

LGPS - Extension of full protection

Following Local Government Minister John Healey’s announcement that he would consider extending full protection to 2020 once the 2008 triennial valuation reports had been received and analysed, Department for Communities and Local Government (CLG) civil servants have now carried out the analysis to establish the likely impact and cost. Our negotiators are awaiting the written report summarising that analysis, but were verbally advised at the Policy Review Group that the cost would be 0.1% of pay bill – as previously predicted by the Government Actuaries Department (GAD). Further negotiations will then follow on means of meeting that cost and extending protection to 2020. Therefore the limited extension of the limited protection for the “Rule of 85” which was hinted at at the time of the special Conference in March 2007 is still dangling in front of us like a rather old carrot…

LGPS - Ill health retirement

Considerable activity has taken place over the ill health retirement Amendment Regulations which came into force on 7 May. These confirmed the three tiers of ill heath retirement benefits, previewed in the Benefit Regulations. However, the qualification criteria and limited third tier benefits – not previously discussed with the trade unions - have given rise to considerable concern. UNISON and the Trade Union Side are working hard to get them improved. Lord Campbell Savours sponsored a debate in the House of Lords and representations have also been made to the House of Commons Administration Committee over the ‘workability’ of the new Regulations.

First tier benefit will apply for life. It was outlined in the Benefit Regulations 2007 and will apply to those with no reasonable prospect of obtaining gainful employment before retirement age. Service is increased by 100% of potential service to normal retirement age. Second tier benefit is for those who cannot obtain gainful employment within a ‘reasonable time of leaving’, but who are likely to obtain gainful employment before normal retirement age. Third tier benefit – for those deemed able to obtain gainful employment within a ‘reasonable period’ of leaving service - was unexpectedly restricted to three years in the Amendment Regulations, irrespective of whether the member is able to obtain gainful employment. There will be a review after 18 months and there is no automatic requirement to move a member to a higher level if s/he becomes unable to undertake gainful employment.

LGPS - Cost sharing

The NEC was advised that the Trade Union Side has continued to assert that no cost-sharing formula should be applied to the LGPS within the Policy Review Group. There is increasing pressure from CLG, the LGA and the employers to limit employer costs. At the same time, separate discussion is taking place amongst the LGPS unions over what an acceptable sustainability strategy for the scheme might look like. It is felt strongly that it should be one which reflects the need for efficient administration and investment procedures, transparent governance and equality principles. I asked whether a sustainability strategy might lead to union acceptance of cost sharing and was mostly reassured that that is certainly not the trade union side objective.

LGPS - Governance issues

Separate work is underway within UNISON and the Trade Union Side to press for strong union member representation on LGPS fund trusteeship bodies. We are arguing for full voting rights, 50% of seats by 2009, full equality proofing and training and facility time for reps. Our campaign is underpinned by European Directive 41/2003 which requires proper control and investment of pension funds.

Updates are available at the pension site online.

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