Pension reform: £144 still well below poverty line

UNISON warned today that many workers will still face poverty in retirement, despite the government’s claims that its proposed overhaul of the state pension system will improve pensions.

Millions of workers will also be clobbered with higher national insurance payments under the plans.

As the government today issues its long-awaited white paper on state pension reform, UNISON said that radical action was needed to halt the decline in pension provision in the UK, which stands to leave many people in financial misery in retirement.

Many employers that sponsor defined benefit pension schemes are facing an increase in national insurance contributions – which from April 2017 could be as high as 3.4%. The union said it feared this would have a knock-on effect that passed cuts onto employees, including the low paid.

Commenting on the paper, Karen Jennings, UNISON assistant general secretary said:
“These changes are being lauded as a good deal for pensioners, but it is worth remembering that £144 is still well below the poverty line, and more will need to be done to prevent workers finding themselves desperately poor in retirement.

“Who will be worse or better off following these changes will depend on salary growth, which remains stagnant for many workers, including millions in the public sector, and inflation, which continues to eat at the income of low earners.

“What is clear is that the real winner is likely to be the Treasury, who will receive a national insurance boost from pension scheme members and employers. This windfall must go back to employers otherwise there is a real risk that many will look to dumb down their current pension offerings even further.

“The government must not hide behind this as a ‘good news story’: It is their duty to guarantee that workers – and in particular the lowest paid – are not left worse off as a result of these proposals either now, or in their retirement.”

While the union welcomed the intention to simplify the confusing existing pensions system, it said it would be looking at the implications of the proposals in the white paper in detail, and would respond to the consultation in full.

The new flat-rate is designed to combine the basic state pension with the second state pension. The union pointed out that this will not affect those who already receive, or will begin receiving their state pension before the next Parliament.

THE SWINNEY TAX

John Swinney (SNP Finance Secretary) told the Scottish Parliament last week that the UK Government had confirmed its intention to increase public sector worker pension contributions in the coming year, as part of a move to increase contributions by an average of 3.2% per cent of pensionable pay by 2014-15.

The Scottish Government could choose not to impose the increases however it did impose them in 2012/13 and it is planning to do so again in 2013/14 and 2014/15. The additional contributions do not go towards pensions, they are simply a tax on public sector workers.

Dave Watson, UNISON Scotland Organiser said: “We agree that these pension changes are being driven by Westminster, but Scottish Government ministers could do something different on this if they wanted to – and they have decided not to.”

A special meeting of UNISON Scotland’s Health Committee will take place within the next two weeks to discuss further industrial action.

Updating the Scottish Council on the NHS pensions dispute in Scotland, Tom Waterson told delegates that it is now clear that it is the Scottish Government that is choosing to impose the pensions tax on health workers in Scotland.  Tom described the Scottish Government pensions tax as ‘The Swinney Tax’.

STRIKE AGAINST CUTS IN PAY, JOBS, SERVICES AND PENSIONS

UNISON’s Scottish Council has voted unanimously to step-up its campaign to defend pay, jobs, services and pensions by organising co-ordinated strike action at its meeting held on Saturday 1st December.

The motion approved by the Council stated:

‘This meeting notes that the political parties in the Scottish Parliament and local councils are making the overall level of cuts in public spending asked of them by the UK Government.’

‘Much of the UK Government’s policy programme is a direct or indirect attack on jobs, wages, pensions and services which UNISON can never agree to. The UK Government’s wider austerity measures, attacks on welfare benefits and overall management of the economy represent further attacks on working people and the most vulnerable in our society.’

DEFEND JOBS, WAGES, PENSIONS AND SERVICES

‘The trade union movement must now step-up its campaign to defend jobs, wages, pensions and services by organising co-ordinated strike action across all sectors of the economy.’

ONE-DAY STRIKE ACROSS SCOTLAND

‘This meeting therefore agrees that UNISON Scotland immediately take the necessary steps to promote with all STUC affiliated trade unions and other professional organisations the need for a co-ordinated industrial action strategy beginning with a one-day strike across Scotland, and to co-ordinate the strike with any action by trade unions at a UK level as appropriate.

UNISON response to Taxpayers' Alliance pensions nonsense

"Financially illiterate drivel aimed at advancing a political agenda to make pensioners poorer" says public services union
UNISON, Scotland largest union in Scotland’s public services, is today calling on the so-called Taxpayers' Alliance (TPA), to get its facts straight after the shady right-wing, low-tax pressure group attacked local government pensions. Again.
Payments into the Local Government Pension Scheme in Scotland last year were £299.944 million MORE than being paid out to pensioners. This inconvenient fact is ignored by the self styled think tank - who likewise seem not to have noticed a connection between the cuts in council workforce that that they have been urging and decline in local government workers paying in to the pension schemes
The tax dodgers' alliance report points out the LGPS like is maturing with an increasing number of pensioners. What they fail to mention is that this is the case with almost all pension funds in the UK.
Similarly unmentioned are;
· That the pension funds enjoy an enormous income from investment – and so aren’t entirely reliant on contributions from members and employers
· That a recent (2011) actuarial valuation of the Local Government Pension Scheme Scotland was very positive
· The LGPS Scotland is currently taking in almost £300 million per year more than it is paying out.
· Even in the event that the scheme was felt to be under pressure - a cost sharing agreement is in place.
· Just 5p in every £1 paid in council tax goes towards pensions. Councils get only 25% of their revenue from council tax, 75% comes from other sources, including business rates and local government grants.
· The numbers in the tax Dodgers Alliance report would only begin to make sense if everyone in local government decided to retire on the same day - a social, political and actuarial absurdity.
Mike Kirby, UNISON Scottish Secretary, said:
"This right-wing pressure group never lets facts get in the way of attacking public services and the people that deliver them. This is financially illiterate drivel. The TPA are simply out of touch with reality.
Pensions for local government are an affordable way of people saving for their retirement - and the results of that are modest enough the average pensions for council workers in Scotland is just £4,000 a year, dropping to just £2,800 for women.
We need to bring private sector pensions up to a decent level, not pull public sector pensions down - two thirds of employees do not get a single penny in contributions from their employers towards their pensions. The government's plans for auto-enrolment will not go far enough to keep people off means tested benefits.”

PENSIONS: Email now to Nicola Sturgeon MSP

Over the last few days we have been circulating postcards to members and non-members encouraging them to send a pre-printed postcard to the Cabinet Secretary for Health & Wellbeing, Nicola Sturgeon.

If you have not seen the postcards please take 5 minutes to send an electronic message with the same message.

Please use this link to send your message to Nicola

UNISON Health workers in Scotland reject Government attacks on their pensions and start a new wave of strikes

The first strike will take place today at the central decontamination unit of Ayrshire Central Hospital in Irvine. Picket lines are in force this morning and the strike will last for 48 hours.

Further selective coordinated strike action will take place on a regular rolling basis across Scotland and will target particular departments in each Health Board. Strike action is planned later this month in NHS Lothian, NHS Lanarkshire and NHS Greater Glasgow & Clyde.

The strikes are intended to increase pressure on the Scottish Government for a Scottish solution to all aspects of the pensions changes. This includes this year’s increase to employee contributions of up to 2.4% - which is effectively a pensions tax on health workers.

Members are particularly angry because not one penny of the ‘pensions tax’ increase in contributions will go towards their pensions.

Mike Kirby, UNISON Scotland Secretary, said: “We do not accept that the Scottish Government has no option other than to follow the UK Government’s proposals. There is a separate scheme in Scotland and there are other options to fund the cost. These should be pursued in partnership.”

"We call on the Scottish Government to seek a Scottish solution, delay the pensions tax, and engage with us to find a negotiated settlement.”

You are encouraged to sign the following e-petitions which are on the HM Government website:

Public & Private Pension Increases - change from RPI to CPI : http://epetitions.direct.gov.uk/petitions/1535

Maintaining a Fair and Sustainable NHS Pension Scheme: http://epetitions.direct.gov.uk/petitions/29071

More than 100,000 signatures may trigger a debate in the Westminster Parliament.

UNISON protesters lobby Health Minister as Scotland launches further industrial action on pensions

UNISON Scotland will on Monday 5 March launch a further round of industrial action on changed proposed to NHS pensions.

Ayrshire & Arran Health Board will be the first of several Boards in Scotland to receive notice for strike to take place in the week of 12th March. This will involve staff working in the Central Decontamination Unit at Ayrshire Central Hospital.

That facility is on Monday 5 March being officially opened by Cabinet Secretary Nicola Sturgeon. Protesters will make it known that UNISON’s 50,000 members in health expect a Scottish solution to all aspects of pensions changes including the year 1 increases to employee contributions of up to 2.4%.

Mike Kirby, Scottish Secretary of UNISON, said:

“Health workers in Scotland will be the major group to face the brunt of contributions increases which even the Scottish Government says are unwanted and unnecessary.

"Scottish Ministers should delay these changes to allow negotiations in NHS Scotland to find alternatives which don’t involve taking money out of Scottish health workers' pockets to give to the Treasury as a windfall tax.”

Tom Waterson, chair of UNISON Scotland's Health Committee said:

“We had hoped to bring the Scottish Government to the table to negotiate on the pension tax due to start in April 2012.

"It is not too late for further industrial action to be avoided, and for the pension tax increases to be delayed to allow a negotiated settlement.”

Don't blame the economy – it's the 1% who are making retirement 'unaffordable'

Behind the rhetoric of crisis, the demise of the pension era is as much a product of economic ideology as circumstance. The real pensions scandal isn't the public sector (mean average pension £7,800, median £5,600) but the private. It's not just the shrinking coverage and payouts (just 35% of private-sector employees now participate in an employer-sponsored scheme compared with 80% in the public sector, while according to the National Association of Pension Funds the average lump sum a newcomer will accrue in a company defined-contribution pension is around £20,000, paying out a princely £1,400 year).

What really grates is the hypocrisy of employers who, having reneged on their contractual obligations, then – like footballers trying to get opponents sent off – attempt to divert attention from their own behaviour by complaining that the public sector isn't playing the game by refusing to follow them in the race to the bottom.

Pensions are complicated. Tax and regulatory changes often have unintended consequences, and are complicit in today's ugly mess. What is uncomplicated, however, is that the chief enemy of private sector pensions is not public sector workers, but private sector directors and top executives, who not only are pleasantly cushioned from the retirement hardship they are visiting on their employees, but also – at least indirectly – profit from it. 

As the TUC's Pensionwatch and a report from the High Pay Commission (HPC) make clear, the disparities between the top and the 99% are huge, both quantitatively and qualitatively, and growing. While companies cite a "perfect storm" of economic turmoil and increasingly longevity as justification for closing their gold-standard final-salary or defined-benefit (DB) schemes for the lower orders – Shell's scheme, whose closure was announced three weeks ago, was the last in the FTSE 100 – the officers still travel first class.

Most large companies still have DB schemes for at least some directors, whose average pension pot last year was £3.6m. Eloquently, the largest was owned by Shell's former chief executive, Jeroen van der Veer, whose £21.6m will yield a handsome £1.2m a year.  In the same vein, the 1% accrue their benefits at least twice as fast as the rest of us, and with a normal retirement age of 60 are exempted from the obligation of ordinary mortals to work longer for the general good. The latest wheeze is to compensate directors for tax changes that penalise contributions above a certain level by handing out payments in lieu averaging £138,000 last year – a pay rise by another name, notes HPC chair Deborah Hargreaves, in exactly the same way as slashing contributions is a pay cut in disguise.

While huge pension payouts are particularly outrageous when they reward failure, says Mark Goyder, director of the thinktank Tomorrow's Company, pay and pensions make a powerful statement about a company's values. "Surely, as with pay, companies should be obliged to explain the rationale for what they do." Behind the short-term crisis rhetoric, the demise of the pension era is as much a product of economic ideology as circumstance.

In the wake of career and employment (with redundancy now a first rather than a last resort for cost-cutters), the abandonment of pensions completes the transfer of employment risk to the individual and the sacrifice of corporate welfare on the altar of shareholder value. Significantly, Shell's closure of its surplus-making scheme was made "to reflect market trends". That's not quite as blunt as Jeff Immelt's "the pension has been a drag [on earnings] for a decade" as he closed GE's US scheme in 2010, but still a reflection of the desire to boost profits – and, indirectly, executives' own pay – rather than economic necessity.

Companies were keen enough to exploit the benefits of their pension funds in good times, using them to fund redundancies and as late as 2004 – when dividend payments outstripped pension contributions by four times – happily taking pension holidays that amounted to at least £20bn overall. 

In her feisty book Retirement Heist: How Companies Plunder and Profit from the Nest Eggs of American Workers, Ellen Schultz notes that pensions do indeed constitute a burden on US firms – but they are largely those, overt or hidden, of the top 1%, which are swelling as those of the 99% at the bottom shrink. Not so much beleaguered captains struggling to keep the boat afloat, chief executives are "silent pirates who looted the ships and left them to sink, along with the retirees, as they sailed away safely in their lifeboats", she says. It couldn't happen here? It already has: same self-manufactured crisis scenario, same unholy alliance of self-interested top executives and global financial facilitators (including fund managers subject to the same perverse incentives), resulting in the same destruction wreaked on long-term savers and the economy as a whole. Pensions are the financial crisis in microcosm, with exactly the same winners and losers.

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PENSION BALLOT SOON

UNISON's Head of Health, Christine McAnea said “This week our health service activists met and voted to finalise negotiations with the employers on the outstanding issues in the Heads of Agreement.”

www.unison.org.uk/acrobat/B5773.pdf

But if negotiations should break down at any point, or if our members vote to reject the offer, our live ballot means we can still take strike action".

“This decision is an important stepping stone to a final agreement. Talks will now enter a final stage, due to conclude in the next few weeks.”

“We will then consult our health service members in a ballot. Pensions are such an important issue to our members and their families, it is only right that they get the final say on their future.”

PENSIONS UPDATE

UNISON’s elected representatives have voted to give the union’s negotiators the

green light to continue negotiations on changes to public sector pensions.

At a pensions summit in London this week, the feedback from every UNISON region was that the majority of branches and members backed continuing negotiations. The summit discussed

the details of the proposals for the Local Government and NHS pension schemes and agreed to the frameworks negotiators have developed with UK Government ministers since November 30.

At the summit, General Secretary Dave Prentis made it clear that UNISON took action for industrial reasons, because negotiations broke down. But the strength of the action brought UK Government ministers back to the table to negotiate properly. He said: “We will carry on negotiating over pensions - because that's what we do as a trade union and because it's what our members want. But at the same time - we are still in dispute and our industrial action ballot is still valid for further action if needed.”

These frameworks cover the schemes in England and Wales although, particularly in the NHS, they have implications for the Scottish pension schemes.

UNISON’s approach to the next stage in Scotland was set out by UNISON Scottish Convener Lillian Macer who said: “As the Scottish Government has the responsibility to address these issues in Scotland we call upon Scottish Government Ministers to explore a distinct Scottish solution for the public service workforce."

www.unison.org.uk/acrobat/B5773.pdf

There is a separate NHS pension scheme in Scotland but it has closely followed the England and Wales scheme because the UK Treasury funds it and therefore has a veto over the scheme regulations.

The NHS Scotland Staff Side Trade Unions have written to the Cabinet Secretary for Health to formally request specific NHS meetings to explore, in the words of the Cabinet Secretary for Finance, “practicable and workable alternatives to the proposed increases”.

This initiative is aimed at exploring the prospects of a Scottish solution. As in local government, the separate Scottish NHS ballot remains live.

The offer known as ‘The Heads of Agreement’ is at: