Saturday, July 14, 2012

Few details of the "Fair Deal"

In the ministerial statement, on 4 July, in which Danny Alexander announced that the Government would press ahead with the changes to the health, civil service and teachers' pension schemes which have been rejected by most trade unions (http://www.publications.parliament.uk/pa/cm201213/cmhansrd/cm120704/wmstext/120704m0001.htm), he also announced that the current "Fair Deal" arrangements to protect pensions in the event of privatisation would be replaced by new arrangements to enable outsourced staff to remain in their public sector pension schemes.

As some well-informed online comment points out, this builds upon the model of "admitted body status" in the Local Government Pension Scheme (LGPS) - but there is no detail about how this is supposed to work in practice (http://www.osborneclarke.com/publications/services/pensions/alert/2012/broad-comparability-assessments-axed.aspx). We are no closer to an understanding of how the same approach will work in the LGPS, although "retention of the Fair Deal" (really its replacement) has been one of the main selling points in the desparate and disingenuous attempts to market a poor compromise as a triumph.

New Labour introduced the "Fair Deal" in order to facilitate privatisation by removing one of the most significant of the obstacles it encountered - and this Government want privatised staff to stay in (somewhat cheaper) public sector pension schemes (against the rantings of Lord Hutton) not because they care about our old age, but because they want to accelerate privatisation and don't want a flight of active contributing members out of pension schemes with plenty of liabilities to retired and deferred members.

This is the same motivation which has driven the Local Government Association to ensure that savings are made from the benefits paid out, and not contributions paid in, to the LGPS. It's not an ignoble motive, and trade unionists should be as interested as employers in the viability of pension funds (albeit for different reasons). However, it does mean that those who trumpet this development as a triumph for trade union negotiators are telling, at best, half of the truth.

The practical difficulties of guaranteeing LGPS membership for transferring staff are considerable. "Admitted bodies" need to be admitted to a particular fund, with contribution rates set according to their circumstances and a bond paid to the fund as security against their bankruptcy. How these arrangements can be varied to ensure continued access to the LGPS for transferring staff, without tripping over procurement regulations, is presumably a topic already taking up the time of at least a few civil servants and local government officers.

I hope it isn't an indication of an excess of pessimism of the intellect to want to see a little more detail on this point. I wouldn't wish to fall into the trap of "miserabilism."

Sent using BlackBerry® from Orange

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