Public Service Pensions Bill
The Bill has now reached Committee Stage in the House of Lords and the FDA has produced a briefing for members of the House of Lords on the issues still outstanding relating to the Bill as currently drafted. Unfortunately the Bill's progress through the first Commons stage did not result in any significant amendments. Therefore a number of concerns remain and we are seeking changes to the Bill in the following areas:
1. Provision for an independent review of the SPA link;
2. Provision to ensure maintenance of membership in public service pension schemes for transferred workers;
3. Removal of the right for the Treasury to reduce accrued benefits (make retrospective changes);
4. Removal of the provision for 'negative revaluation' of CARE;
5. Introduction of the new scheme by amendment to current regulations rather than 'closure';
6. Improvement to the rights to consultation and consent to reflect current provisions in Superannuation Act 1972;
7. Removal of the clause (23 in the Bill as introduced) that allows employers to bypass public service pension schemes altogether; and
8. Removal of Treasury control over all elements of schemes without requirements for proper consultation and very little Parliamentary scrutiny.
The FDA remains committed to ensuring the reforms agreed by members are faithfully implemented. The amendments we are seeking are not intended to reopen the negotiations, rather they are simply aimed at ensuring the agreement that was reached is implemented in the most effective way possible.
The Public Service Pensions Bill, which has reached the committee stage, contains a number of provisions about which FDA members will have concerns. The FDA has made a joint submission with Prospect to the House of Commons Public Bill Committee now considering the Bill. As the Bill moves through Parliament, the FDA will be making suggestions about how it could and should be amended.
The Bill sets out a common legal framework for the Government's proposals for the reform of public service pensions. As such, the Bill will cover the various aspects of the Proposed Final Agreements that are, in most respects, consistent across the main public sector schemes. It is, however, largely an enabling bill, as a number of important issues are left for detailed regulations governing each of the main schemes. The Bill is not, therefore, the last word on the proposed changes to civil service pension arrangements as many important issues will be determined by regulations and scheme rules.
Together with our colleagues in Prospect, we have been scrutinising the Bill to ensure that it is broadly consistent with the Civil Service Proposed Final Agreement, which the FDA (and Prospect) members endorsed in a ballot earlier this year. We have identified a number of significant issues with the Bill - as currently drafted - as follows:
a) the Bill devolves a number of significant issues to the Treasury, with insufficient ministerial accountability or Parliamentary oversight;
b) there is a lack of clarity in the Bill about how the proposed risk-sharing and cost-capping mechanism will operate;
c) there is inadequate provision within the Bill to ensure that the Government's "25-year guarantee" of no further changes will be delivered;
d) the Bill explicitly allows for responsible authorities to make detrimental retrospective changes to members' pensions without agreement;
e) there is an absence within the Bill of any independent review of the link between the schemes' Normal Pension Age and State Pension Age;
f) the Bill appears to allow employers an opportunity to bypass the established arrangements to make either superior or inferior provision for individuals or groups of staff; and
g) the Bill allows for the closure of some existing pension schemes without the requirement for appropriate negotiation or consultation.
The issues listed above are significant and will generate concern for FDA members. We are, in our submission to the House of Commons, making a number of suggestions for how the Bill could and should be amended in order to overcome those concerns, improve the Bill and bring it into line with the Proposed Final Agreement, which was endorsed by members.
The publication of the Public Service Pensions Bill on 13 September reinforces the urgent need to properly reward senior public servants, said the FDA.
FDA general secretary Dave Penman said:
"The Public Service Pensions Bill published today will result in public servants working longer for reduced pension benefits. Taken together with the Government's unilateral decision to change the uprating index for public sector pensions from RPI to CPI means that current and future pensioners will see their income substantially cut.
"Public servants are also being required to pay more for their pension at a time when their own pay continues to be frozen.
"A time bomb is ticking. There are emerging signs that senior public servants - doing some of the most complex jobs in the public sector - are leaving for better remunerated jobs elsewhere in the economy.
"It is now vital that the Government addresses the issue of the total reward - of pay and pension - for those whose jobs underpin the country's social and economic well being."
Implementation of the 2015 scheme proposals
On 4 July the Minister for the Cabinet Office, Francis Maude, wrote to all civil service unions confirming that the Government will legislate to implement the proposals set out in the final pensions offer of 9 March, which was accepted in a ballot of FDA members.
The Government's final offer was conditional on it being able to "gain support from a sufficient number of trade unions" and this implied that the Government could seek to implement an inferior scheme if this condition was not met. Following the outcome of the FDA ballot of members, the union moved quickly to push for an early decision to implement - in full - the terms set out in the final offer. The FDA welcomes the confirmation that these terms will now be implemented.
The FDA, together with other unions, is pressing for the earliest possible implementation of the Fair Deal provisions of the final offer. These provisions will allow civil servants transferred to employment outside of the civil service to remain a member of the civil service pension scheme. We are also in discussion about other outstanding issues, including scheme governance and the equality impact assessment.
The FDA expects that full consultation on the detail of draft legislation to implement the final proposals will commence in early course.
Dave Penman, who becomes FDA general secretary on 2 July, has warned of an exodus of senior civil servants to the private sector, unless the Government addresses the lack of fair reward. In an interview with The Independent on Sunday in mid-June, Penman said: "At some point you get to a situation where our members are saying 'enough's enough'. And those who have got the choice will start to go. If you don't start thinking about that now, you'll end up coming to a crisis point."
The full Independent on Sunday article can be read at: Civil Service 'faces exodus of mandarins'.
The FDA has been clear that the result of the ballot on the proposed pension scheme from 2015 should not be interpreted as members' endorsement of the new scheme. Writing in The Guardian in mid-May, FDA general secretary designate Dave Penman elaborated on this, and explained that senior civil servants' demands for an appropriate 'total reward' package - decent pension provision and fair pay - are continuing to grow.
More information - and a link to the full article - can be found at: Demands for ‘a fair package’ are growing, says FDA deputy general secretary Dave Penman in today’s Guardian.
The result of the FDA ballot on the new scheme, which closed on 8 May 2012, was as follows: a total of 73% voted to accept the offer, with 27% voting to reject. The turnout was 43%.
Prospect and GMB - both unions with members in the civil service - have also voted to accept the Government's proposals for a new pension scheme from 2015.
Dave Penman, FDA general secretary designate, said:
"This result should not be interpreted as an endorsement by FDA members of the new scheme. FDA members remain deeply unhappy about aspects of the changes and the Government's approach to pension reform. The imposition of increases to pension contributions, and the Government's unilateral decision to devalue pensions in payment by switching the uprating index from RPI to CPI, has generated both anger and resentment.
"Members have seen their pay and living standards cut because of the 2012 increase in pension contributions imposed by the Government, alongside the continuing public sector pay freeze. This cut in living standards will be exacerbated by the further contribution increases planned for 2013 and 2014. These increases are nothing more than a levy on public sector workers, which the FDA has consistently opposed.
"The changes to pension arrangements, including the increases to contributions, will impact on the overall competitiveness of the total reward package. There is already considerable evidence that the pay levels of those in the more senior grades of the civil service are substantially below those for comparable jobs in the wider public and private sectors. A priority for the FDA in the coming months will be seeking action by employers and the Government to address these disparities in pay levels."