Thursday, December 22, 2011

Accrual rates and revaluation - when is a significant improvement not a significant improvement? Or is it?

The Government having got itself out of its pickle we do now have details of the proposals for the Local Government Pension Scheme - but, having spent the evening drafting correspondence for members on that topic, I thought I would turn first of all the proposals for the NHS Pension Scheme.

I particularly want to reflect on the proposition that "an accrual rate of 1/54 uprated by CPI plus 1.5%, represents a significant improvement from the outset of the negotiations".

I wonder about this because when we published our response to the Government's announcement on 2 November we explained their position on career average schemes at that point as follows; "The treasury is proposing that the earnings should be revalued in line with average earning increases up to retirement."

So, at that point, four weeks before our strike, they were offering health workers an accrual rate of 1/60ths with a revaluation rate of average earnings (or, as the Government predict CPI plus 2%).

So - is a career average pension scheme with an accrual rate of 1/54ths and a revaluation rate of CPI plus 1.5% an improvement on a scheme with an accrual rate of 1/60ths and a revaluation rate of CPI plus 2%?

Someone who is better with spreadsheets than I am suggests not.

Of course, anything we get now will be a significant improvment "from the outset of negotiations" because, at the "outset of negotiations" the Government were floating accrual rates of 1/100ths (and our negotiators weren't telling us this at the time). But that was the outset. Anyone who has ever negotiated about anything knows that the eventual settlement is always a long way from the starting positions of either party, and that sometimes you exaggerate your initial position, knowing that.

Health workers took strike action because they were being asked to work longer. They still are (though with a tripartite review for some staff, including those in emergency services).

Health workers took strike action because they were being asked to pay more. That is held off for one year for those below an income threshold. That's all.

Health workers took strike action because they were being asked to accept less when they retired. It's not at all clear that the "Heads of Agreement" make real progress on this point compared to what was already on the table on 2 November.

Whereas local government workers have another year and more to negotiate, the Government wants to rush health workers to make a decision now. Yet while they promise 25 years of certainty, Tory supporters are already plotting the next attack on our pensions.

I haven't read enough yet to have a firm opinion - except that I already have a very firm opinion that we ought not to be rushed to accept anything!

2 comments:

Anonymous said...

Jon, thanks for this. How should I lobby the union to reject the NHS proposal? Cameron, UNISON member

Anonymous said...

>>details of the proposals for the Local Government Pension Scheme

These are the least detailed details I have ever seen.