You will be aware that the Chief Secretary to the Treasury, Danny Alexander, delivered a statement to the House of Commons yesterday that set out a number of alterations to the government's position on public service pensions.
He emphasised that this offer;
'increases the cost ceiling and provides for generous transitional arrangements for those closest to retirement'.
In addition to this statement, the Treasury issued a document (Public Service Pensions: good pensions that last)which provides further detail on this latest position. (The full statement and the good pensions at last document can be viewed on the FBU website www.fbu.org.uk).
In short the new position sets out the following:
- An improved accrual rate of 60ths instead of the previous accrual rate of 65ths;
- Certain protection measures for public service workers who are closest to their retirement age:
'Protect public sector workers who, as of 1 April 2012, have ten years or less to their pension age. It is my objective that these people 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 subject to scheme specific discussions determining the fairest way of achieving this and ensuring costs to the taxpayer do not exceed the forecasts of the Office for Budgetary Responsibility (OBR) on public sector pension costs.
- Government's objective to ensure that no further reforms to scheme design and contribution rates are necessary for at least the next twenty-five years.
- Adjusted (higher) cost ceilings for the four schemes that have already had cost ceilings set. Danny Alexander stated that;
'this change provides an increase of around eight per cent in the amount of money scheme negotiators have to work with'
We will be assessing the detail of these proposals and will give a further explanation to members in the near future.
The position of the Firefighters' Pension Schemes is slightly different to the four schemes mentioned in this document simply because government have delayed setting a cost ceiling for fire service schemes, at our request, to allow further specific occupational factors to be considered in more detail. In addition to the protection outlined in this document the FBU has been highlighting issues specific to the fire service schemes that require additional protection. The FBU has been exchanging substantial evidence to support our concerns and is continuing to discuss these with CLG and their actuarial advisors.
We expect that the cost ceiling for the firefighter schemes along with a scheme reference design will be set by the end of November after further discussion around specific occupational assumptions has taken place. In addition to this the FBU has had the opportunity to discuss issues with the English Fire Minister and his counterparts in Scotland, Northern Ireland and Wales. Further such discussions will take place before the cost ceiling is set.
Throughout these discussions we have made clear our opposition to the cost ceiling process. Nevertheless, in view of the government intention to set cost ceilings we have argued that the process must be based on realistic assumptions which reflect the specific occupational nature of the roles. For example, we have challenged the current assumptions about the extent of ill-health retirements in an aging fire service workforce.
Once cost ceilings are set the Treasury has indicated that scheme specific discussions can take place to vary the proposed scheme design to reflect the nature of the occupation, but cannot exceed the cost ceiling. You will recognise the importance the FBU placed on our getting a realistic cost ceiling which allows this flexibility rather than an unrealistic one that placed a straitjacket on any future discussions.
Discussions are ongoing and the FBU welcomes the government's move to improve cost ceilings for those four schemes that were set on 7 October but it is essential that members recognise that the government is still proposing public service workers pay more, work longer and get less.
It is important that branch meetings still take place and the union prepares for national strike action in the event that these ongoing discussions do not deliver an outcome that is acceptable to members.
DA Statement 02nd November 2011
HM Treasury: Good Pensions that last