£95k cap

In 2015, the rules around approval for exit payments valued in excess of £95,000 changed and now require direct approval from the Minister for the Cabinet Office.

When this change was introduced, Cabinet Office made clear that this was ahead of the implementation of proposals to cap exit payments across the public sector at that level.

While £95,000 sounds like a substantial sum, it includes the cost of early payment of pension so is not just the severance cash that members may receive, it includes money that goes to the pension scheme, not the individual.

In fact the majority of cases that hit the £95,000 threshold do so because the member is entitled to early access to their pension without early payment reduction.

When it comes to the severance payments themselves, those with long service can be vulnerable to the cap, even if they are not entailed to immediate pension access.

HM Treasury consulted on cross public sector implementation of this approach 31 July - 27 August 2015. In September 2015 TUC Congress unanimously passed a motion supporting the FDA's campaign against this move.

FDA and 4,000 others responded to that consultation but despite the vast majority of respondents signalling opposition to policy, government have incorporated it into the Enterprise Act.

The FDA has met with a number of members of Parliament, from the Lords and the Commons, to seek amendments to the Bill.

We have also sent briefing materials to parliamentarians as the Bill has moved through the Parliamentary process.

While some changes to wording took place during the Parliamentary scrutiny process, the main objectives of the legislation remain, the Enterprise Bill received Royal Assent on 4 May 2016.

 In the civil service, this provision has been a policy for more than a year and is a fixed element to both the Cabinet Office and HM Treasury changes proposed in September 2016.

Useful documents:

Enterprise Act
FDA Parliamentary Briefing
HMT consultation document
HMT response to consultation
FDA speech to TUC Congress 2015