Dear Brother/Sister
The Executive Council met on 9 and 10 April 2014 and discussed the ongoing pension dispute. They received a full report of the recent meeting with HM Treasury and the ongoing discussions with Government and National Employers.
Meeting with HM Treasury officials: 8 April
Earlier in the week (8 April) the FBU negotiators met with officials from HM Treasury and the Department for Communities and Local Government (DCLG) to seek clarification on issues that arose from the Budget announcement on 19 March which related to tax and pension. As we reported on 31 March, HM Treasury have commenced a consultation, ending on 11 June 2014, regarding the tax regime for pensions. (See circular 2014HOC0206MW and video update posted on same day).
If these proposals were to be imposed in full they would result in an increase in the minimum pension age (for tax purposes) from 55 to 57 from 2028. What this could mean is that (apart from ill-health cases) a tax levy would be placed on pension benefits taken before age 57. This tax levy is currently set at 55%. This is obviously a huge concern as it potentially undermines the potential for early retirement options from 55. This is one area that the union has been involved in discussions around with officials from DCLG and with our actuaries.
- It is important to note that any such change would not affect the benefits of members accrued under the 1992 Firefighters’ Pension Scheme because it has a Normal Pension Age of 55 but would affect both the 2006 and proposed 2015 schemes. It might have very significant implications for a large number of members.
The union explained the significant concerns we have in relation to the proposals and were given the assurance that these would be carefully considered before any decision was made in relation to this issue. We have already started preparing our submission outlining why this is a specific concern to firefighters. We have also raised the issue as a matter of concern within the TUC as there are potentially much wider implications for all public sector pension schemes.
Why the meeting with HM Treasury was so crucial to all future discussions
The meeting with the Treasury was of great importance for the following reasons. We have been seeking for a considerable time to push DCLG into presenting amended pension proposals which would improve the position for FBU members. There are multiple aspects to these discussions. Whether any revised proposals would be satisfactory or would be acknowledged to improve the situation is a matter which FBU members would subsequently decide. But a key task, as set by our Conference and as monitored by the Executive Council, has been to try to extract a revised set of proposals from DCLG. It is this work which has taken up the time since our last strike action.
As previously reported some of this work is of a technical nature and has required input and discussion from actuaries on both side. We are aware that any pension proposals made by a Government department need to be costed, checked on actuarial grounds and approved by HM Treasury.
The risk from the new Treasury proposals on pension taxation is that all our discussions might have been undermined, with DCLG claiming they are not able to make any proposals until the Treasury consultation is concluded and responded to. The consultation closes on 11 June and HM Treasury officials confirmed to us that it is intended that a Government response will be issued by late July this year.
The meeting on 8 April was essential to clarify key points regarding our discussions on pensions – particularly as to whether DCLG are able to make new proposals or not.
Significantly, HM Treasury officials confirmed that this consultation exercise did not prevent DCLG from continuing to discuss potential improvements to the 2015 scheme. You will appreciate that this is an extremely important clarification. It effectively puts the ball firmly back in DCLG’s court.
Ongoing discussions with DCLG and Employers
We have been discussing potential areas of improvement with DCLG since January 2014 and have had correspondence in this time from Brandon Lewis confirming that he was happy to continue the ongoing work around early retirement options and 2015 contribution rates. He also confirmed that he had instructed the Government’s Actuary’s Department (GAD) to prioritise this.
We were informed that GAD would be unavailable for a short while due to other demands on their time in the lead up to the Budget and that would cause a slight delay to the ongoing work. This was communicated to Executive Council members and factored into their considerations.
We have also been discussing the issue of fitness and capability with the National Employers and DCLG. Unfortunately, although some understanding has been reached on support mechanisms, the guarantee that firefighters will not be sacked if they cannot maintain operational fitness to age 60 has not been given. This is still a key concern that remains unresolved.
The current position – letter to Brandon Lewis
Despite our receiving letters expressing a keenness to maintain the current dialogue, there is mounting concern that although we have discussed several areas of potential improvements we have yet to have been formally presented with any actual proposals. FBU members have been extremely patient and measured throughout these discussions. We have explored every avenue for possible improvement as directed by our Conference decisions.
We have allowed ample time for Government to cost, clarify issues and gain any necessary assurances, or to seek authority for any improvements they are planning to present. We have also always ensured that we are available for discussions either via the telephone or in face-to-face meetings.
It is important that we did not want to face accusations of undermining these talks, for example by calling any action while we have been in discussions.
It is absolutely clear that we have fully participated in every attempt to resolve this dispute through negotiations from the earliest submissions of evidence. We have suggested amendments to the legislation, taken part in reviews and more recently in discussions around potential areas of improvements.
The union has been very careful to try to avoid the setting of any deadlines at any stage during our long-running dispute. However, following the most recent report the Executive Council concluded that there is a clear possibility that despite the ongoing work, Government do not intend to improve its current proposals.
As a result, in a letter to Brandon Lewis (attached) we have outlined that the FBU Executive Council is due to meet on 24 April 2014 to consider the next steps in our campaign. We have arranged this to build in a period of time which still allows them the opportunity to present us with any revised or amended proposals before then. We have also informed him that if none are forthcoming we would obviously conclude that it is not their intention to make any revised or improved proposals and factor this into our internal discussions.
We have not closed the door on negotiations and made it clear that between now and the meeting, FBU negotiators will be available to meet with DCLG.
Thanks to all members
Once again, on behalf of the Executive Council, I would like to thank all members and congratulate you on the determination and strength shown throughout this campaign. This has been, and remains a long, complicated and difficult campaign. In most other areas of the public sector the pensions’ disputes are long settled. That is still far from the case in the Fire and Rescue Service. That is solely down to your unity and determination. Please keep up the campaigning, lobbying and discussions on this vital issue.
Whatever the outcome on the 24 April, the Executive Council meeting will be a pivotal stage of the campaign and members should prepare for all possible outcomes.
Please ensure that you and your colleagues are up-to-date with the latest developments and please make every attempt to attend any meeting that is called.
Best wishes.
Yours fraternally
MATT WRACK
GENERAL SECRETARY
[222MW]
