Who the cap fits?

Almost six months ago, I returned here to the vexed question of the “exit payment cap”, noting that the Government’s response to 2019 consultation was then awaited.

 

The Government have now responded to the consultation, confirming their intention to proceed. UNISON have rightly highlighted that this measure will not simply prevent excessive payments to “fat cats” but will hit long-serving middle-ranking employees made redundant above the age of 55.

 

Speaking as a long-serving, middle-ranking local government employee (now retired) who was made redundant above the age of 55 I should probably declare an interest, not only in the UNISON comments but also in the detailed analysis from the Local Government Pension Scheme Advisory Board, who explain that;

 

“The major impact of the regulations will be on LGPS (Local Government Pension Scheme) members aged 55 or over who currently qualify for an unreduced pension because of redundancy or efficiency retirement as well as a severance payment under The Local Government (Early Termination of Employment) (Discretionary Compensation) (England and Wales) Regulations 2006. We understand that changes to those regulations will prevent the payment of severance in addition to a pension strain cost. Not only will a severance payment no longer be payable but if a pension strain payment cannot be made in full because of the cap, then the member would be faced with having to take a reduced pension.”

 

This would be a dramatically detrimental change to members of the LGPS facing redundancy at an age when they may struggle to find another job – in my own case I would not have received a redundancy payment and would have faced a reduction in my pension (unless I could have raised funds to “buy out” the “actuarial reduction”). In these circumstances, of course, it will be less likely that staff will “volunteer” for redundancies (which the economic consequences of the coronavirus emergency for local authorities suggest will be increasingly likely).

 

Given that the Coalition Government told us that the pension changes made early in the last decade would be a settlement to last a generation (‘Danny Alexander promised that if a deal was done there would be no further changes to public service pension schemes for 25 years”), the trade unions need to get beyond mere rhetorical condemnation of this attack – in the case of UNISON, the candidates for General Secretary are offered an opportunity to spell out what they think should be done about this particular outrage.