Monday 26 December 2011

What the pensions 'offer' meant: - pay more, get less, retire older

The NASUWT website contains a link to the ‘offer’ that was presented to the education unions before Christmas – and that both the NUT and NASUWT refused to sign. You can read it for yourself on:

I am sure that NUT and NASUWT pensions experts will be able to provide teachers with some precise modelling to update the 'pensions calculators' and to rebuff the false claims that the Government have been making. For now, this is what I think the different clauses in the 'Heads of Agreement' meant:
1 i) Unions must agree to no more strike action while the ‘deal’ is being finalised = AGREE  TO GIVE-UP THE WEAPON THAT REALLY THREATENS US,  and
ii) If you want a better accrual rate (i.e a bigger amount set aside each year to improve pension payouts), you’ll have to pay for it by a worse indexation rate (cutting pension payouts), because we’re not putting any more money into the scheme (see 3 below)  = THERE IS NO MORE MONEY ON THE TABLE SO THERE CAN BE NO REAL CONCESSIONS.
2a.  The final-salary scheme will be replaced by a career-average-scheme. Because of the way that career-average schemes work, this change will mean a much smaller pension unless the new ‘accrual rate’ is considerably better than the 1/60 rate that applies in the existing final-salary scheme for new entrants (for example, the Nuvos career-average scheme negotiated in 2006 for the civil service has a much better rate of 1/43) ...
b.     ... but they only propose a marginal improvement to a rate of 1/57. A full calculation and modelling needs to be done to show exactly how much pensions would be cut as a result (and should have been done before any union agreed) but it = WE GET LESS PENSION.
c.      Career-averages have to be linked to some kind of indexation to bring past salaries in line with today’s prices. In November, the Government were proposing the link was with average earnings.  Now they have changed that to CPI + 1.6% – and they have also calculated that this would mean a cut in scheme costs. i.e. = WE GET LESS PENSION.
d.     Normal Pension Age will equal the State Pension Age = WE RETIRE OLDER.
This is worse than was on offer in November because Osborne announced in his Autumn Statement that the increase in State Pension Age will now hit more workers. Instead of having to be born after 5 April 1969 to see your State Pension Age rise to 67, now anyone born after 6 April 1961 will now not get to retire on their full pension until they are 67 or older. For younger workers, it will be 68. The Government wants to increase this even further beyond 68 in future. Negotiators had been discussing if a deal could be reached that would set teachers’ pension ages beneath the State Pension Age. In December, the Government took any such possible compromise off the table.
e.     Pensions in payment to increase in line with the CPI = WE GET LESS PENSION.  The NUT will be appealing against the court ruling that the Government was justified in switching from the higher RPI to the lower CPI Index but, if the courts again find against us, this will mean around a 15% cut in pensions paid out over retirement.
f.       Benefits earned in deferment to increase in line with CPI, also = WE GET LESS PENSION
g.      Average member contributions of 9.6% = WE PAY MORE, while our real pay is cut again. These are the same pay cuts that have been displayed on the NUT pensions calculator for some time. The increases will be phased in from April 2012, the full impact being in place from April 2014. For a UPS3 teacher in Inner London, they mean a £48 monthly pay cut in 2012 (£30 in England/Wales), and a £123 monthly cut in 2014 (£74 in E/W).
h.     to k. (partner pension, death in service, ill-health etc. – same as in current scheme)
l.       “Actuarially fair early/late retirement factors on a cost-neutral basis except for those retiring earlier than their NPA at age 65, 66 and 67, who will have early retirement factors of 3% per year (relative to their NPA)” = WE GET LESS PENSION if you don’t work on until new, higher, normal pension ages. The only slight concession offered  here is that, instead of losing around 5% of your pension for every year you retire before your NPA, the Government will kindly only steal 3% per year from you if you decide to retire at 65-67. This will still mean a big loss of your pension if you decide you can’t struggle on to 67 or 68 but need to take your pension earlier. If you decide to retire at 65, when your NPA to get a full pension is 68, you would still lose 9% of your entitlements. The Government know most of us can’t struggle on until 68 – so they can rob our pensions.
m.   “An employer cost cap to provide backstop protection to the taxpayer against unforeseen costs and risks” (In other words, if they decide that we are living longer, the employers won’t have to pay more – the extra costs will be borne by us, the employees).
3.     “The gross cost ceiling has been fixed at 21.7%” = WE PAY IN MORE, THEY PAY IN LESS! Employees’ contributions will be going up to an average 9.6% from the existing 6.4% - a 50% increase. To total 21.7%, that means employers’ contributions will be going down from 14.1% to 12.1%. No wonder Danny Alexander bragged in Parliament that his proposals will make pensions "substantially more affordable to alternative providers" - paving the way for further privatisation by driving down the cost of our pensions.
6.     “Teachers who, as of 1 April 2012, have 10 years or less to their current pension age will see no change in when they can retire, nor any decrease in the amount of pension they receive at their current Normal Pension Age”. This is simply the ’10-year protection” that was offered – and rightly rejected as being insufficient – back in November. Even these teachers would still have to pay in more from 2012 and get less in retirement due to CPI.
7.     “Members who are within a further 3.5 years of their Normal Pension Age, i.e. up to 13.5 years from their NPA will have limited protection”. This was the only slight further concession giving some protection to teachers aged between 46½ and 50 by April 2012.   The Government’s figures show about 60% of teachers would get no protection at all.

1 comment:

Anonymous said...

Hi Martin

Yes, please take back Central Beds view to the executive that we must continue to fight the government over this and be united with other unions who are also prepared to reject any so called deal.

All those who took action in June and November and whose executives look as if they are caving in will be angry. What was the point of calling people out if a few weeks later, when nothing has fundamentally changed, they are prepared to begin to settle? Those unions that did this look very poor and will have to answer to their members.
This is now the time to keep up the pressure and call another day of action to do so. The government were clearly wobbling on this and we dont want any brakes being put on now when the action has had such a clear impact.
See you on 7th.