Career averages and accrual rates

It's good to see PCS Conference joining the Conferences of ATL and the NUT in agreeing to ballot for action over pensions on 30 June, joining UCU who, of course, already have a mandate for action.

In the midst of redundancies, UNISON activists need continually to renew our focus upon the attack on pensions so that our members grasp the enormity of the theft which the Government is perpetrating.

I was fortunate on Monday to be invited to a meeting of the Lambeth Teachers' Association, where I saw the NUT's online pension calculator spelling out to teachers what they would lose.

Such calculations will vary, in their detail, from scheme to scheme, but it is essential that the strategy of the trade unions proceeds in the direction of greater unity rather than allowing the advent of "scheme-specific" discussions to fracture us into a myriad of separate disputes and negotiations.

Because, if you were designing a pension scheme from scratch in a fair society, a "career average" scheme might seem preferable to a final salary scheme, there is a danger that some in the trade union movement might be tempted to look for a deal which accepts significant and detrimental changes if they can be dressed up as delivering some greater "fairness".

What we need to watch out for is the proposed "accrual rate" in any proposed scheme. To keep the same overall pension "pot" the percentage of each year's salary which is "earned" as future pension needs to be equivalent to the percentage of final salary currently "earned" for each year of service - indeed, since (on average) final salaries will be higher than career average salaries, even this equivalence would represent a reduction in total pension payments.

Therefore, for those of us in pension schemes which currently pay one sixtieth of final salary per year of service, any accrual rate below 1.67% would represent a very significant further reduction in pension benefits - and even at that accrual rate, rather than redistributing pension payments from higher to lower paid workers, the redistribution would be from the higher paid to the Chancellor of the Exchequer.

If the Government are suggesting much lower accrual rates then that would expose their true intention - to collapse our pension schemes completely and to force us out into the private market to enrich their City backers by gambling with our savings in expensive money-purchase pension schemes.

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