Saturday, December 31, 2011

Optimism of the will for the New Year

The first post on this blog in 2011 predicted that this would be “the toughest year for UNISON activists since the formation of the Union in 1993” and that “our best chance of effective unified action forcing a climbdown from the Government would be to fight to defend our pensions. The sooner we mobilise our strength as a unified national trade union movement the better our chance of forcing the Government back.”

The next post applauded the joint New Year statement made by the General Secretaries of the “big three” unions, which spelt out the opposition of our movement to the Coalition Government. Overall, I started 2011 with plenty of optimism of the will.

And 2011 was the year in which the trade union movement fought back against that Government as never before, with the largest trade union demonstration in the history of the country, and the biggest strike for a generation (at least!) My optimism of the will seems to have been well placed.

However, 2011 also saw a continuing pay freeze in the public sector, hundreds of thousands of job losses and – so far – no positive outcome of the pensions strike. A certain amount of pessimism of the intellect would appear to be called for also.

The trade union movement is not an end in itself. Workers do not join trade unions primarily out of altruism or for reasons of political belief (although there is absolutely nothing wrong with the minority whose commitment does spring from that source!)

Workers join, and are active in, trade unions for instrumental reasons – and if we wish to continue to be relevant to our members we need to deliver outcomes which protect the interests of those same members.

It is important that we are seen to fight for our members, but that alone is not enough. We need to deliver results. We need to do this with every tool to hand, including industrial, legal and political action.

To do this (and on this point I agree with the anonymous blogger at UNISON Active) we need to develop the political campaigning of our trade union. A century ago, trade unionists were prevented by law from supporting a political party. Today our problem is more one of finding a justification to support the only political party we have. More to the point, we have to work with our natural allies.

It is thirty years since the high water mark of the Labour Left, when Tony Benn was narrowly denied the Deputy Leadership of the Party with the votes of MPs who had already determined to leave for the SDP. The socialist policies which reflect the views of our trade union have been in retreat ever since.

As this political retreat has taken place, the membership of trade unions has declined. The 12.3 Million members we had in 1981 were already fewer the peak of 1979, but it was twice the number we have now. Nevertheless that much stronger labour movement comprehensively failed to resist the Thatcher Government. From a weaker position we now have to do better.

No cavalry is coming over the hill. No other struggle will arise to turn the tables on the Cabinet of millionaires. All we have is ourselves. This is the moment of the trade unions. We can reverse a generation of decline, or we can continue to accommodate to it, believing that the pinnacle of our aspiration is damage limitation (we could call that “new realism” perhaps…)

As the New Year’s editorial in today’s Morning Star put it; “the only possibility of a happy 2012 for working people will depend on the readiness of the labour movement to unite in determined resistance to the coalition and to do everything to make its existence as brief as possible.”

When I predicted that 2011 would be UNISON’s hardest year to date, I wasn’t wrong. Now I predict that 2012 will be worse and I doubt that I’ll be wrong about that either. That’s the pessimism of the intellect I mentioned earlier.

But from Barnet to Southampton (and in so many places beside) we see the potential of our movement.

Happy New Year.

Eat, drink and make merry for tomorrow we face a harder struggle than ever.

Happy New Year to the West Midlands!

I’ve just added links to the website of the Staffordshire Branch and the blog of the Birmingham Branch Secretaries. I wish a Happy New Year to UNISON members in the West Midlands, who had the good sense and good fortune to organise a meeting almost immediately after the strike on 30 November, of which our General Secretary rightly made a great deal in his report to the December meeting of our National Executive Council (NEC).

From what the NEC were told, the bulk of our activists in the West Midlands felt that our members could be persuaded to take further action, albeit that it would be difficult to replicate N30. A minority were more gung ho and another minority more pessimistic, but the message which I took from the report of the General Secretary was that we were in a position to take further action if necessary. UNISON in the West Midlands did well to get reliable information to the national Centre as promptly as they did.

Birmingham Branch are also beneficiaries of the particular attention of the new national organising unit – and I will watch with interest in 2012 to see how this initiative turns out. UNISON’s organisation in England’s largest local authority is of more than local interest – and we need to increase our membership and density in every branch.

Friday, December 30, 2011

Led by a Star

Mark Serwotka, commenting on the pensions dispute, issues a timely warning against defeatism in tomorrow's Morning Star (http://www.morningstaronline.co.uk/index.php/news/content/view/full/113639).



Those looking for resolutions for the New Year should take heed - and should also consider the wise words of the General Secretary of the Communist Party of Britain, Rob Griffiths, who says "Unions need to meet urgently to draw up a strategy based on common objectives and which recognises the value of a bold and imaginative approach to various forms of popular and industrial action."



UNISON's leadership led N30's strike, just as UNISON was the heart and soul of the great mobilisation on 26 March. 2011 has been the year in which UNISON has shown what it can achieve with sound leadership and vigorous mobilisation. Our achievements this year have been a tribute to our leaders as well as to our members.



In 2012 we face a choice. It is right that we should face this choice, as policy in our trade union is made by members. Our choice is between following the guidance of those who (believing that this was always about "damage limitation") think we should settle for the modest gains of the Framework Agreements or following the line laid down months ago by our General Secretary when he said "to those who say 'name the day' I say one day won't be enough" (http://unison.org.uk/conference2011/news_view.asp?did=6958).



It is a choice to be made by the elected members of our Service Group Executives (SGEs) on 10 January, and it is not a choice to be made hastily. I have spent much of the holidays reflecting on the real but limited gains made in negotiations and asking myself if this is all we should settle for.



I think, perhaps, that UNISON is better than this. UNISON's position has yet to be determined, and I hope that SGE members read tomorrow's Morning Star.

Sent using BlackBerry® from Orange

A flawed defence of UNISON

Some folk get confused when reading a criticism of the tactics of the leadership of a trade union, and wrongly conclude that this amounts to an attack upon the trade union itself.



Such is today the case with the notoriously shy bloggers at UNISON Active (http://unisonactive.blogspot.com/2011/12/flawed-attack-on-unison.html) who are not amused by the musings of Owen Jones in today's Morning Star (http://union-news.co.uk/2011/12/unions-have-a-big-task-ahead-of-them-in-2012/).



Owen has earned the wrath of his anonymous adversary with the use of the word "capitulation". The outpouring of ire to which this gives rises serves to demonstrate, if nothing else, that the phrase "ultra-left" does no more to enlighten debate around the pensions dispute than the phrase "sell-out".



UNISON Anonymous are keen to point out that our members in the LGPS don't face an immediate contribution increase (which is both welcome and true) and that the lower paid half of the NHS workforce face no increase for at least a year (which is also true, and also welcome).



However, given that the other two of our three demands (that we should not get less and should not work longer) have not really been achieved, it is perhaps an example of litotes that the nameless blogger describes the Framework Agreements as "far from perfect."



I would suggest that a framework which defers the pensions of all those more than ten years from retirement, whilst leaving to the lottery of litigation the vital question of indexation is "far from perfect" in the way that my singing voice is "far from perfect."



"Capitulation" isn't my word and I haven't used it - but the (sadly and inexplicably) anonymous blogger at UNISON Active would better use their time attending to the unsatisfactory details of the Framework Agreements, rather than taking ill-judged potshots at Mr Jones.

Sent using BlackBerry® from Orange

Thursday, December 29, 2011

NHS pensions - comments on a commentary

UNISON has produced a helpful commentary upon the Framework Agreement for the National Health Service Pension Scheme. This will help members to assess a proposed settlement which has been described as “the best that can be achieved by negotiation” (although this in the context of our being told that “we always knew this would be a damage limitation exercise – aimed at reducing the worst impacts of the government’s pension changes.”) (Which is not how I remember us putting it in the run up to N30!)

I’ll blog more thoroughly on this, but there are a couple of points in the commentary which stand out very obviously. The first is the observation, in the context of reporting the transitional protection for those close to retirement that “there is additional money for these protections outside of the initial cost ceiling set by the government” which explains the clause in the Framework Agreement which states that “The costs associated with the protection… …sit outside the costs of the reference scheme.” This appears to contradict the claim from Danny Alexander that “These heads of agreement deliver the Government's key objectives in full, and do so with no new money since our November offer.”

Whilst the delivery of partial protection for some scheme members but not others on the basis of their age can be viewed as divisive, it is certainly better if such protection is funded with additional money and not therefore directly at the expense of those excluded from the protection. This is not negligible and our negotiators deserve credit for this achievement.

The second point that strikes me immediately is the implicit contribution to the debate about the interaction of accrual rates and revaluation rates (about which I have blogged before) in the commentary on paragraphs 3b and 3c of the Framework Agreement. The commentary suggests that “an accrual rate of 1/54th for service after 2015 is around 11% better than the 1/60th accrual rate in the reference scheme and the current 2008 section.” This is, of course, mathematically true (in fact it is 11.111% better to three decimal places).

However, the value of the pension paid out of a career average scheme depends upon the accrual rate and the revaluation rate – and the fact that different accrual and revaluation rates are proposed in each of the Teachers and Civil Servants Framework Agreements illustrates the point that one can vary at the expense of the other to provide differently shaped pension schemes within the same overall cost ceiling.

This is what the commentary says; “the government actuaries valued average earnings as the Consumer Price Index (CPI) + 2.25% only for the purpose of costing the reference scheme in the government’s original offer. This would not have been the calculation used in future revaluations. In future it would have been actual average earnings, and these can and do fluctuate. For example in the 3 years to the end of 2010 Average Weekly Earnings Index (AWE) was 1.7% per year below even CPI. The AWE index is not expected to rise above CPI for some considerable time in the future. The uprating in this offer of CPI + 1.5% will be fixed which means we can be sure of the amount by which pensions will be revalued.”

I’m afraid that this is selective use of an extract from time series data which would almost warrant a place in the Guardian’s “Bad Science” column. It is true that in the three years to the end of 2010 average earnings fell behind the CPI, but that is because we are in the first period which has seen a sustained fall in real wages since the 1920s!

It is true to say that we can be certain that pension earned in previous years will be revalued by CPI+1.5% each year, but over the long run it is very likely that average earnings will increase by more than this. For example, the assumptions upon which our NHS pension calculator were based were that; “Future AWE is assumed to be 1.5% above RPI. For the projection of pension from retirement, future RPI is assumed to be 4.6% pa (in line with September 2010 RPI), and future CPI is assumed to be 3.6% pa, i.e. 1% lower than RPI. (Actual CPI as at September 2010 was 3.1% pa.)”

So, whilst our commentary on the NHS Pension Framework Agreement does not foresee average weekly earnings climbing significantly about the CPI for some time, our published assumption about the long term is that average weekly earnings will tend to increase by 2.5% more than CPI (1.5% above RPI which is estimated to be 1% above CPI). This is consistent with the long term experience of increasing labour productivity reflected in increasing real earnings, and the world would be a bleaker place even that it already is if trade unions did not hope and expect that we shall get back to increasing real wages!

The fact that the revaluation factor in a career average pension scheme may fall behind increases in average earnings does not necessarily make the scheme bad, there is a trade off to be made between accrual rates and revaluation rates, and there are winners and losers in any different way of balancing these two elements of a Career Average Revalued Earnings (CARE) pension scheme.

We are told that this is the “best that can be achieved by negotiation” and the Health Service Group Executive (SGE) on 10 January will have to make a judgement about a pension scheme with an accrual rate of 1/54th and a revaluation rate of CPI+1.5% because that is what on the table. Shrill denunciation will be of little help, an even handed commentary upon the current offer would be.

What is disappointing about the commentary at the moment is that it does not acknowledge the interplay of the accrual and revaluation rates. It applauds the (favourable) shift in the accrual rate (compared to the reference scheme) whilst obfuscating the (clearly related) change to a (less favourable) revalution rate. The decisions our SGEs have to make about pensions are serious decisions deserving an even-handed presentation of the facts, not an attempt to “sell” an offer which falls so very far short of achieving the objectives for which our members took strike action. The current presentation of the arguments around accrual and revaluation rates in the commentary runs the risk of being seen to be encouraging acceptance of the offer.

Taking account of the adverse changes to the normal retirement age for those too young for the transitional protection and the fact that the Framework Agreement accepts the use of CPI to uprate pensions in payment, I can see why an increasing number of our members in health may fell the approach being put to our members in Oxfordshire may be the right way to go.

Wednesday, December 28, 2011

Trying to understand the LGPS Framework Agreement

This post may repeat points I have already made about the Local Government Pension Scheme (LGPS) and the Framework Agreement, but I think a balanced assessment of where we are and what we ought to do now does require some careful thought. Those not interested in overlong blog posts about public service pensions are probably reading the wrong blog!

The LGPS pensions contribution calculator can be turned on its head to calculate how much less worse off local government workers will be from April next year (and the year after) as a result of the dropping of the previously proposed contribution increases.

For example, someone working full-time on £20,000 will “save” £144 after tax between April 2012 and March 2014 compared to CLG Option One, while someone on £30,000 will “save” more than £520 net over the same period. Even though these are just sums of money which we won’t be losing, they are non-negligible (and we also will not see the less favourable accrual rates in an “interim” LGPS which will not now be introduced).

Whilst it would be idle to dismiss the outcome of the negotiations which have reached this point as a “sell-out” it is however equally misleading to see them, as some have, simply as a victory for the trade union side.

This isn’t only because we have made no progress on the increasing normal retirement age or on the massively detrimental change to the index used to uprate our pensions (though both these factors need to be taken into account as we decide what to do next).

It is crucial to an informed assessment of the outcome of the LGPS negotiations (and particularly to why this is significantly different – and better – or, at least, less worse - than the outcome of negotiations on the “pay as you go” pension schemes) to appreciate that the real victory of negotiators (on both sides) has been in educating the Government about the nature of the LGPS, the basis on which it is funded and the consequent limits to the ability of the Government to achieve its original goals.

In a “pay as you go” pension scheme it is straightforward to increase employee contributions at the expense of employer contributions in order to siphon money from the pockets of employees to pay down a deficit which they didn’t cause.

The LGPS, however, is a horse of a different colour. Employee contribution rates are set in accordance with Regulation 3 the Benefit Regulations. The basis upon which the contributions from employers are determined is set out in the Administration Regulations, Regulation 36 of which requires that each fund is the subject of a triennial actuarial valuation, beginning in March 2010.

The contribution rates payable by each employer are determined in accordance with that valuation. Therefore, whilst the Government could have amended the Benefit Regulations to increase employee contributions from April 2012, they could not easily thereby have reduced employer contributions in order to redistribute money from the pockets of scheme members toward the Exchequer, as this would have required an amendment to the Administration Regulations to provide for an interim valuation.

The original consultation document which set out the options to increase employee pension contributions from April 2012 recognised this problem and read as follows at paragraph 4.11; “To ensure LGPS employers and taxpayers benefit from the savings achieved by the statutory amendments finally introduced, we suggest that it would be necessary to provide a technical amendment, effective from April 2012, that enables scheme-appointed actuaries to vary rates and adjustment certificates both between valuation exercises (i.e. between the 2010 and 2013 valuations), and provide that the accrual rate changes proposed are reflected specifically in the 31 March 2013 valuation exercise to reflect the level of savings produced in scheme employers` contribution rates from April 2014. Views are invited on this particular proposal and how best it might be achieved in regulatory terms.”

The dilemma which this request for views highlighted was put fairly succinctly in the response to the consultation from one London Borough who pointed out that “an interim valuation performed at the current time is not supported as it would be likely to increase employer contributions as investment market values have deteriorated and Gilt yields have fallen leading to a reduction in assets and an increase in liabilities”. In other words, because of the current state of the stock market, it is not likely that, even had an increase in employee contributions been imposed from April 2012, that an actuarial valuation of the funds would have enabled a reduction in employer contributions in order to facilitate a transfer of resources to deficit reduction.

This difference between the LGPS and the other public service pension schemes arises from the unique nature of the LGPS as a funded scheme, and it is a significant achievement by negotiators for the trade unions and the local authority employers that they have forced the Government to an appreciation of the futility of enforcing employee contribution increases in the immediate future.

This achievement has averted some very real and material disadvantage for hundreds of thousands of local government workers who might otherwise have faced paying arbitrary and unjustified increases in pension contributions, amounting to significant pay cuts, from next April. This is a good thing and not a “sell-out”.

However, if the approach of the Framework Agreement, which is to negotiate a new LGPS for April 2014, rather than impose an interim scheme almost immediately, arises from a correct understanding of the nature of the scheme and its statutory regulation, then I can’t really see why we should accept the increase in retirement age, or give up fighting for proper uprating of pensions simply because our negotiators and our employers have forced the Government to accept reality. We have not yet won a victory and ought not to give up fighting for that victory now.

Friday, December 23, 2011

The pensions arguments of Xmas yet to come

Already today, I have been visited by the pensions arguments of Xmas past and the pensions arguments of Xmas present, but more troubling than either of these may be the pensions arguments of Xmas yet to come.

For, whilst it is easy, after too much food and wine, to be irritated by the excitable comrades for whom any mass strike is Christmas come early, what will become of us if, Scrooge-like, we call the prospect for further struggle “humbug” and make the wishes of the financial advisors come true by settling for a warmed over version of the offer we rejected in early November?

Will Danny Alexander’s promise of no further change to our pensions for 25 years come true?

No.

Instead, emboldened by what they clearly see as their victory on this question (These heads of agreement deliver the Government's key objectives in full, and do so with no new money since our November offer.), the Tory-led Government will not only advance their attacks upon workers’ individual and collective rights, but will also hold firm to their plan for continuing reductions in real wages and assaults upon our Welfare State.

The activists and organisation which we have encouraged and built in the run up to 30 November will be demoralised and disorientated by our seeming capitulation, and opportunists within our own movement will seek membership growth without growing the overall membership of all trade unions.

As early as Xmas 2012 we will be reading of the plans of the Tories who hope to form a Government alone in the near future to end defined benefit pensions for good and all.

Is this the future we want to wake up to after the Xmas holiday?

UNISON members need to find out who represents them on their Service Group Executive and lobby them before the meetings on 10 January.

The message of a Christmas Carol is surely that we still have time to change our minds?

Merry Xmas one and all (particularly regular readers of this blog, Sid and Doris Festive-Blogger)!

The Pensions Arguments of Xmas Present - what has changed since early November?

This Xmas we have a series of “Heads of Agreement” to mull over as we munch on mince pies and regret eating sprouts. Following the publication of our ballot results on 3 November, and ahead of our strike on 30 November, UNISON published a very useful document dealing with Danny Alexander’s now notorious (at least to him) statement of 2 November.

Since this document explained what had and had not been changed by that statement, and (by clear implication) why we were right to press ahead with a strike against Government plans even after that statement, it is worth returning to that document and looking at what is now proposed (which our Service Group Executives are to consider on 10 January.

The UNISON document acknowledged the two changes made in the 2 November statement. The first of these was in relation to accrual rates in the new career average schemes, which would remain at 1/60th rather than a less advantageous 1/65th. In fact, as we have now seen, since the Government’s proposal was for an accrual rate of 1/60th linked to a revaluation rate of CPI+2% (intended to reflect the increase in average earnings), the Government have been more than happy to concede what appear to be more generous accrual rates if these are linked to less favourable revaluation rates.

Although I do intend to return to this topic in greater detail after the festive season, for the moment I think the key thing to recognise is that a settlement which favours the accrual rate at the expense of the revaluation rate is closer to a final salary scheme, since it gives greater weight to later years in the career, whereas a settlement which keeps a higher revaluation rate at the expense of the accrual rate gives a relatively greater weight to earlier years in the career. I should imagine that an equality impact assessment could keep whatever the collective noun for statisticians is busy for quite a while…

The second change made on 2 November, and acknowledge in the UNISON document, was the protection of the retirement income for those within ten years’ of retirement, with tapered protection for those close to that limit. The UNISON document noted that it was then “not yet clear whether this would have to be paid for with further detrimental changes to other workers’ pension entitlements.” It is now clear, since all of the “Heads of Agreement” (with the exception of the local government, discussed further below) come in within the Government’s financial targets set on 2 November that this is precisely how that protection has been achieved. Having regard to the age profile of trade union (and pension scheme) membership, we may have served a significant proportion of our members well. I hope this won’t prove to have been at the expense of the future of our movement.

Given that we had acknowledged these two changes in advance of 30 November, they were not relevant to our (correct) decision to strike on N30. What was relevant were those things that had not changed at that point. Have they changed since?

Contribution increases

The UNISON document from early November correctly reported that, at that time, “as before, contributions will be increased for all pension scheme members earning over £15,000 a year by an average 3.2% (for part time workers this will apply if your full time equivalent salary is greater than £15,000), the lower paid will pay less than the average but many middle and higher paid will pay more. For the Local Government Pension Scheme ministers are currently consulting on proposals for contribution increases lower than the average 3% called for, by having a lower average contribution increase between 1% and 1.5% in exchange for a worse accrual rate than the standard 1/60th.

So what has changed?

Well, in the NHS scheme, protection from contribution increases in April 2012 have been extended to those earning up to £26,557 and, as the deal is explained on our website “in 2012 members will pay between 0 and 2.4% extra. Those with a pensionable salary of less than £26,557 will not pay any extra. This will apply to 48% of the NHS workforce and probably around 70% of UNISON members. There will be further discussions on contributions in years 2 and 3.”

Whilst it is true that the Government has conceded the possibility that they may think again about future contribution increases in the light of the experience of opt-outs, that appears to be a very small and unappetising carrot (something with which anyone who has spent the afternoon peeling root vegetable for a roast dinner will be most familiar!). This is so for two reasons.

First, the Government have not put any more money on the table and so (at least in the “pay as you go” schemes) it is clear that any reduction in employee contribution income will have to be made up somewhere else.

Secondly, the Government know that the trade unions will (quite rightly) do all we can to encourage our members not to opt out of occupational pension schemes which will continue to offer them a deal less awful than the appalling offer from the private sector.

As for the Local Government Pension Scheme (LGPS), here there has been a real shift in the Government’s position, since it is now acknowledged that there can be no contribution increase until at least April 2014, and accepted that, if the scheme can find alternative savings, there need not be contribution increases even from that date.

It is vitally important, in assessing this development, to understand the point made by Tory Wandsworth Council (of all people!) There never was any point (from the Government’s point of view) in trying to enforce contribution increases on LGPS members before April 2014, because there was no way of using such an increase to produce a countervailing reduction in employers’ contributions in order to siphon money out of their budgets towards deficit reduction in the short term.

Retirement Age

The UNISON document responding to the 2 November statement stated correctly that; “as before, anyone who won’t already be within 10 or 14 years of the current Normal Retirement Age (as explained above) will now face increases in their Retirement Age, rising in line with the State Pension Age, rising to 66, then 67, then 68.” That remains the case in each and every one of the “Heads of Agreement” – and, of course, the State Pension Age can be varied by the Government.

Although the LGPS proposals provide for “flexible retirement” between 55 and 75, this flexibility is constrained by the actuarial reductions which would apply to those retiring before their retirement age, which will be set in accordance with the state pension age. Therefore, there is no practical difference between any of the schemes on this point. If we accept the current proposals as the basis for negotiation we are accepting that we shall work longer.

Shift to Career Average Pensions

The UNISON document replying to what Danny Alexander had said on 2 November point out, rightly, that “as before, the Treasury’s preferred design for all schemes remains a Career Average Revalued Earnings scheme(CARE) where the pay used to calculate pension is an average of pay earned by an individual over their membership of the scheme. The Treasury is proposing that the earnings should be revalued in line with average earning increases up to retirement. This is different to the current Final Salary schemes where the pay used to calculate the pension is based on earnings near retirement.”

Although the Treasury has been happy to allow negotiators in each scheme to increase the accrual rate at the expense of the revaluation rate (shifting the eventual outcome marginally closer to final salary and away from career average) this has only been permitted within the overall cost ceilings set on 2 November. The LGPS is (now) excluded from this overall ceiling because the different nature of the regulation of this funded pension scheme (in which local authorities themselves are stakeholders) means that a Tory Government is no more able now to dictate outcomes than a Labour Government was in the last Parliament.

So, if we were to redraft the UNISON document responding to the 2 November statement in order to respond to the statement made on 20 December what would we say has changed?

Not the retirement age.

Not the future shape of the schemes.

The contribution increase in health is put off for a year for the lowest paid half of the workforce, and in local government for everyone for two years (plus in the LGPS the Government now accepts the limit of their power to dictate outcomes, which is clearly a good thing).

We have also preserved the Fair Deal (about which more later) which is, for those to whom it will apply, very certainly a good thing.

But is this good enough for us to give up the fight our members were so willing to fight on N30?

That is a question to be asked to, and answered by, our elected Service Group Executives (SGEs) on 10 January.

The Pensions Arguments of Xmas Past - uprating and price indices


A little over a year ago, ahead of Xmas 2010, I was pleased to see UNISON encouraging members to lobby Members of Parliament against the (then imminent) shift from uprating pensions in payment in line with the Retail Price Index (RPI) to the Consumer Price Index (CPI). 135 MPs have, over the last year, signed the Early Day Motion in opposition to this change.
This particular unanticipated assault on the living standards of occupational pensioners had come about almost six months before in George Osborne’s unnecessary “Emergency Budget” of June 2010. 
The admirable Civil Service Pensioners’ Association (CSPA) had sounded the alarm on this point almost immediately, highlighting the dishonesty of the Coalition parties. It is worth repeating the following from their website;
The index-linking arrangements for public sector pensions stem from the Pension (Increase) Act 1971. The law is complicated but it has had the effect of ensuring that each April public sector pensions have been increased in line with the Retail Prices Index, as recorded for the previous September, so as to maintain their purchasing power. The RPI link has been applied since 1972, employees have been led to believe by pension scheme literature that the RPI link would be maintained and many have made financial choices based on that understanding. Following much media speculation about the future of the current arrangements, we sought clarification from the three main political parties about their intentions and we received the following assurances.

At a meeting held on 30 March 2010, Angela Eagle said on behalf of the Labour Party "Following the agreement for change reached with the unions in 2005, we are satisfied that public sector pensions are affordable, sustainable and fair. We have no plans to change the current index-linking arrangements."

In a letter dated 12 April 2010, Steve Webb said on behalf of the Liberal Democrats "We are very clear that all accrued rights should be honoured: a pension promise made should be a pension promise kept. Therefore we would not make any changes to pension rights that have already been built up. I have confirmed that I regard accrued index-linked rights as protected."

In a letter dated 27 April 2010, Philip Hammond said on behalf of the Conservatives "Indexation of pensions in payment is an established part of pensions legislation. The Conservative Party has no plans to change the current index-linking of public sector pensions in payment. We agree with the view that the right to indexation of pensions already accrued is part of the accrued pension rights and those rights will be protected. Our proposed £50,000 cap on public sector pension rights accrued was always intended to be a real-terms cap and therefore will be subject to indexation to reflect inflation. It would make no sense to express a long-term cap on pensions in nominal terms."
The TUC joined the CSPA in opposition to this change a fortnight after it was made. Even then though the presentation of the TUC opposition was revealing, Brendan Barber was quoted as saying that “On the day that the Institute of Directors is due to launch a further attack on public sector pensions, this TUC research shows that public sector pensioners have already been hit hard in the budget,” and “Significant changes were negotiated in public sector pensions just a few years ago and the Budget has cut benefits further.” (I have added emphasis).
With hindsight, the TUC position, which was not at that time to take any action about the issue (though subsequently of course the trade union movement has coalesced around two related legal challenges now on their way to the Court of Appeal), faced in two directions even then. On the one hand the dramatic impact upon the living standards of pensioners was highlighted. On the other hand (in anticipation, since realised, of the coming assault upon our pension schemes), the cost savings arising from the change were also hinted at.
It is therefore noteworthy that none of the “Heads of Agreement” in relation to any of the four main public service pension schemes have anything to say about the basis of uprating of pensions. This is instead left to the courts, which might overturn such a decision for some procedural flaw, such as a lack of appropriate consultation, or the taking of a decision for irrelevant reasons, but cannot indefinitely prevent a Government acting as it wishes within the law. To achieve this requires a political campaign utilising all the tools we can put our hands on (including industrial action).
Although the basis of indexation of pensions post-retirement is not the easiest topic I have ever had to explain at a trade union meeting, as our members (and the public) have grasped the sleight of hand whereby the Government have taken some 15% of the lifetime value of our pensions (giving the lie to the “protection of accrued benefits”), opposition has grown. It’s not just the 135 MPs who have signed up in opposition, but the more than 100,000 signatures on the e-petition which should now see a debate on the subject in Parliament.
UNISON National Delegate Conference 2011 called upon our National Executive Council (NEC) to “mount a substantial campaign amongst members against the change from RPI to CPI.” We have lobbied members to get their MPs to express opposition, and we have urged members to sign the e-petition, but perhaps the most significant part of the campaign which we have waged has been through the firm support of the entire Union for the action taken, at the behest of our Service Groups, by the large majority of our members on 30 November. This was in line with another element of the same Conference decision that the NEC ought to “build unity across UNISON and with other unions to oppose current and proposed detrimental changes to pension rights and, acting within UNISON rules and the law, to support service groups and sectors seeking to co-ordinate official national industrial action in defence of pensions.”
As we put it in the generic “Vote YES” leaflet in the run up to N30; “Changes recently imposed mean your pension is already worth less and you will receive less when you retire. We say enough is enough.” Our pension calculators also drew members’ attention to the implications of the change in uprating our pensions (questions 16 and 17 of the NHS calculator and 14 and 15 of the LGPS calculator). Members I spoke to certainly understood our opposition to the change from RPI to CPI to uprate pensions in payment as part of what we were striking against.
Critically, because the shift from RPI to CPI applies in exactly the same way to all our pension schemes (and to many more beside), a demand around this shift would be one thing which could give us the unity of the trade unions, against the loss of which the Communist Party of Britain rightly warned in yesterday’s Morning Star.
Negotiations around such details as accrual and revaluation rates, as well as employee contributions, must necessarily take place on a scheme by scheme basis because they are scheme specific. This has been a practical difficulty in sustaining trade union unity and has facilitated the Government’s tactic of “divide and rule”.
A unifying demand that the Government reverse the shift from RPI to CPI for uprating pensions would not only unite all public sector workers, but would be in the interests of private sector occupational pensioners and members of other pension schemes in the public and private sectors.
This is not some impossible demand. Although the Office of National Statistics (ONS) denied a Guardian report that they had bowed to pressure from the Royal Statistical Society (RSS) (who have been investigating this topic and has set up a working group) to review the use of CPI for these purposes, the CSPA report that just such a review is taking place (“The Office of National Statistics is working to improve both the RPI and the CPI measures but their work is not expected to be complete until 2013... …The Royal Society of Statisticians is contributing to the ONS work.”).
It is therefore a perfectly credible and reasonable demand that the Government should revert to use of the RPI to uprate pensions (and benefits) whilst the ONS works to develop a better index than either the RPI or the CPI.
I hope that one of the questions which UNISON’s Service Groups will be able to consider on 10 January is whether or not to send our negotiators back to see Danny Alexander and Francis Maude to ask them to reverse George Osborne’s dishonest and unacceptable change in the basis of uprating pensions in payment, and whether or not to prepare for further united industrial action to support them in this demand. As another UNISON NEC member said, before last Xmas, UNISON “will look to take every opportunity to try to reverse” the change to CPI. Now might be the right time to do what we pledged last Xmas.

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!

Tuesday, December 20, 2011

Pickled Eric causes trouble

Eric is once more in a pickle, as he is responsible for the local government unions suspending their provisional agreement to the “Heads of Agreement” on the Local Government Pension Scheme agreed only yesterday. This news on the UNISON website echoes less detailed press statements from both GMB and UNITE and is clearly a joint union position.

Whatever did he say?

Update with an answer from a well-informed source who advises reading the Local Government Chronicle for an answer to that question. It seems DCLG got confused about the difference between a cost ceiling and a cap on employer contributions…

Waiting for the details on our pensions


Well, we’ve all listened to Danny Alexander prattle on, and the Treasury have announced that Departments will be issuing written ministerial statements with details of the “Heads of Agreement” for each pension fund. Michael Gove has issued the statement for the Teachers’ Pension Scheme and Francis Maude for the Civil Servants. UNISON members are still waiting for the statements on the NHS Pension Scheme (which doesn’t yet appear on the DoH website) and the Local Government Pension Scheme, although this website has the detail and appears to have seen the LGPS statement It’s not up on the CLG website as I write.
We need to see the detail in order to discuss what we do next.
Update at ten to four.

Well, although details are all over the place online, I still can’t find Eric Pickles statement on the LGPS on the CLG website but the GMB are clearly displeased by whatever it says…
Update at four o’clock

Here now on our website are the details for the NHS pension scheme proposals.
Update at ten to five
This exchange on the Guardian website explains why we are waiting for a further letter from pickled Eric on the LGPS;
Q: Was the letter that upset the GMB sent by Eric Pickles?
Yes, says Alexander.
Q: What do you feel about him trying to scupper this deal?

Alexander says the letter was withdrawn. Another letter is being sent.
Update at ten past five

UNITE are angry with Pickled Eric as well…

Monday, December 19, 2011

What is proposed for NHS pensions?

We now have some idea of what is being proposed for members in the National Health Service pension scheme. This will be put to the Health Servie Group Executive (SGE) on 10 January, and all UNISON members should be making contact with their SGE members. The devil is, as ever, in the detail we do not yet have. If those earning under £26,000 have been offered one year’s protection from contribution increases, who is paying for this? And what is happening after that year? If we see this dispute simply as a “damage limitation exercise” then perhaps we should encourage ourselves to give away a great deal. If we believe that our reasonable, affordable, sustainable pension schemes deserve defending, maybe we should fight on?
At any event, the decision belongs not to those who have been in the negotiations but to the elected lay members on the Health SGE. UNISON members should lobby those elected by our members to represent their interests.

What is happening with the Local Government Pension Scheme?

We now have a circular from UNISON HQ concerning the negotiations with the local government employers in relation to the Local Government Pension Scheme (LGPS). This reflects an agreement in principle between unions and employers not to make any increase in pension contributions next year, and not until 2014, with negotiations about the future scheme to be introduced at that time (rather than in 2015) to continue.

None of this is certain. The Government (in the unpleasant person of Eric Pickles) has yet to agree. UNISON’s Service Group Executives (SGEs) will also have their say on 10 January – and UNISON members need to be assisted to communicate their views to SGE members.

The concession from the Government in not increasing contributions from 2012 clearly reflects the reality of the LGPS – as explained in the comments to the Government from Tory Wandsworth Council – that “any saving from increased employee contributions or reduced accrual of pensions would reduce the call on employer contributions at the next triennial valuation of the Pension Fund”.

As Wandsworth point out that “an interim valuation performed at the current time is not supported as it would be likely to increase employer contributions as investment market values have deteriorated and Gilt yields have fallen leading to a reduction in assets and an increase in liabilities”, it becomes clear that the Government’s objective – to take money from the pockets of our members in increased pension contributions in order to channel them in the cause of deficit reduction – is simply unachievable in the LGPS ahead of the triennial actuarial valuation in 2013.

Therefore, there is no point in the Government enforcing increased employee contributions in the LGPS before 2014, as such contributions would merely (horrors!) be paid into our pension scheme and not into George Osborne’s coffers.

The implications of this development require a little thought, but it is clear that the threat to the LGPS is simply postponed. Local Government workers were abandoned by the rest of the public sector in the last round of pension negotiations. If we are to learn from that error we should probably not repay that in kind on this occasion.

100+ MPs back our pensions fight

It’s good to see that more than 100 Members of Parliament have now signed up to the Early Day Motion which calls on the Government to come to a reasonable agreement over public sector pensions. This comes after the e-petition opposing the shift from the Retail Price Index(RPI) to the Consumer Price Index(CPI) passed the 100,000 signature hurdle to ensure a debate in Parliament.

We have increasingly solid political and public support to reinforce the evidence of the very effective strike action on 30 November. In assessing whatever we may hear later this afternoon, and deciding how to respond, we should take this into account.

Breaking news - there will be no deal on pensions today

In this time of 24 hour “news” everything is reported at breakneck speed, in simplified soundbites that continually convey a sense of dramatic motion. This is certainly the case as we wait to hear from the Public Service Liaison Group meeting at the TUC this afternoon. It can cause a loss of perspective.

The BBC tell us negotiations are “on a knife edge”. There are hints of optimism from the teachers and, again, according to the BBC “there has been some agreement on the scheme affecting local government employees.”

Such reporting encourages some over hasty responses in various quarters. Some of the cries of “sell-out” are, at the very least, premature. (Remember that some comrades predicted that local government would be broken away from the unity of the public sector back in the summer…)

Mind you, the vitriolic response of the anonymous blogger at UNISONActive is at least as sterile as any of the denunciations s/he derides. Even allowing for how upset some of those at the other end of the icepick (as it were) may be at the passing of the “Dear Leader” I worry for the blood pressure of those in our movement who believe the “ultra-left” (as they put it) to be the main problem.

Were I able, I might well be at the lobby this afternoon, in the rain outside Congress House – not to attack or criticise our leaders but to give them the confidence they ought to have that our members are willing and able to fight on if that is what we need for a fair settlement.

It falls to the General Secretary of the National Association of Head Teachers to make the obvious, calming point that; “It is important to remember that unions are democratic organisations - no deal of this magnitude can be completed behind closed doors. Any outcomes - and there is no proposal on the table yet - will have to go to members and union executives."

As I was saying, in UNISON, this means that the crucial decisionmaking forums will be the Service Group Executives (SGEs), meeting on 10 January. Each SGE member should be making arrangements to take soundings from their constituency, so that when they exercise their responsibility to take a decision on our behalf they know the views of those they represent.

Branches need to engage members in this dialogue, and for this to be both possible and meaningful, the Union needs (even over Xmas) to revise and update our pensions calculators to take account of any revisions in the Government’s position. Any such revision should enable members to compare what is now “on offer” to what was on offer before the 30 November strike, and also to the status quo ante (what we have at the moment).

Whatever we may hear from the purveyors of instant news later today, no deal can have been done, for no UNISON negotiator has a mandate to do any such deal. Our trade union is, in accordance with Rule B.2.2, lay member led, and it is for elected lay members, for good or ill, to make decisions.

Activists in branches need urgently to communicate to members, not so much an opinion about what we are told this afternoon, as encouragement to engage with the process of democratic decision-making over the next three weeks. That said, branches have an absolute right to make recommendations to members both at this point and in the event of any subsequent consultative ballot of members, providing that this is done in accordance with our Union's lay democracy

Update at twenty five past three – read closely what the news report about Health Service Pensions actually said. The headline
said “Public sector pensions: 'Deal' on health scheme” – but the detail said “Unison is poised to put an agreement to members of its executive in the new year”. It is up to the Health SGE to take a view – and it is up to every healthworker in UNISON to share their views with their SGE members. Let's look at the detail and make our own minds up!
The elected members of each SGE are listed (subject to subsequent changes) in the report of the outcomes of the last elections.