Pensions: busting the myths
Members say: ‘Why I’m voting yes’
AUTUMN 2011
Industrial action – what does it mean for you?
THE MAGAZINE FOR ALL UNISON MEMBERS AND THEIR FAMILIES
to protect your pension
Welcome to PENSIONS EDITION
BALLOT OPENS 11 OCTOBER VOTE YES TO PROTECT YOUR PENSION If your employer operates the local government pension scheme, NHS pension scheme or civil service pension scheme then in October you’ll receive a ballot paper asking you to take industrial action over your pension (see page 3 for more details). I’m asking you to vote ‘yes’ because proposed changes to your pension schemes simply aren’t fair. You pay into your pension throughout your career so that you can have security and dignity in retirement. Now, ministers want most of you to pay more, to work longer and at the end of your working life, to receive a worse pension. Did you know that the ministers we’re negotiating with, without agreement, have already changed for the worse the way in which those receiving a public sector pension get an increase each year to take account of inflation? They have stopped using the Retail Price Index which has been used for decades and, from this year, pensions will only increase in line with the Consumer Price Index – a much worse index. This change alone has reduced the overall value of the pensions by over 10%. Now, they want to increase your pension contributions by around 50% if you earn above £15,000. It’s the equivalent on average of a 3% pay cut. Not a penny of this major increase in your contributions will go towards improving your pension schemes. Instead it will go to the Treasury. This is an additional unfair tax on public sector workers and is deliberately disguised as money for the pension schemes, which they falsely claim to be unaffordable. The truth is public sector pension funds are cash rich and affordable. On top of this, they want most of you to work longer before you can take your pension in full. Even if you have a protected pensionable retirement age of 65, this will be torn up. You will be expected to work until 66, then to 67 and 68 as the state retirement age increases. They then want us to agree to new pension schemes, but we have no idea what the value of any new scheme would be or the transitional arrangements to it.
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VISIT OUR WEBSITE: WWW.UNISON.ORG.UK 2
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UNISON working together with other TUC trade unions has opposed this attack on our pensions. I want to assure you that we have negotiated with ministers in good faith and will continue to negotiate. But we also know that public sector workers like you are already enduring pay freezes, the threat of privatisation, reorganisations and cuts in services. It’s not fair to target you any further. You deserve the pension you are already entitled to. And so we have decided to ballot for industrial action. We only take strike action as a last resort. We will do everything in our power to ensure no harm occurs to clients, patients and users of services but we need to send a message that we will stand up to protect our pensions. We need your support and your help to send this message. When you receive your ballot paper I urge you to vote ‘yes’. Talk to your colleagues and get them to join UNISON to strengthen our voice. Talk to your local branch and your local MP and for more information look at our website: unison.org.uk/protectourpensions Vote ‘yes’ and together we can send a powerful message to protect our pensions.
DAVE PRENTIS UNISON GENERAL SECRETARY Volume 19, number 3 U is published by UNISON – the public service union – and distributed to every member. Non members pay £30 a year. Editorial enquiries The Editor, UNISON centre, 130 Euston Road, London NW1 2AY Tel: 0845 355 0845; Textphone 08000967968 Email: u.magazine@unison.co.uk Advertising Redactive Media Group, 17 Britton Street, London EC1M 5TP 020 7880 6200; info@redactive.co.uk While every effort is made to ensure the reliability of advertisers, UNISON cannot accept any liability. Inclusion of advertisements does not imply any recommendation. Design www.design-mill.co.uk Print TU ink Paper 100% Post-consumer waste Polywrap Oxo-degradable polythene U magazine is available in audio format by contacting Pat Payne, UNISON communications, at the address above.
Pensions plan What you need to know about the UNISON industrial action ballot over pensions. Will I get a vote? If your employer operates the Local Government Pension Scheme, the NHS Pension Scheme or the Principle Civil Service Pension Scheme there will be separate ballots over possible industrial action. The pension schemes are part of your terms and conditions at work. If you’re in a job with some other pension scheme – if you work for a private utility company or many of the pre-1992 universities for instance – you won’t be party to a dispute about the three main public service schemes and you won’t be balloted. You also won’t be entitled to vote if you’re already retired or if you will have left employment before 30 November. If you work in Northern Ireland, and you have just taken part in a separate vote on industrial action you won’t be taking part in this ballot. What’s the ballot timetable? Ballot papers will start being sent to relevant members on 11 October and the ballot closes on 3 November. If you haven’t received a ballot paper by 17 October, and you think you should be included in the ballot, you can contact the ballot helpline on 0845 355 0845. You should do this before noon on 31 October.
We’ve been patient, we’ve co-operated. But there comes a time when we say: ‘Enough is enough’”.
Are other unions balloting for action? Most of the unions with members in public service pension schemes are balloting over possible action. If members vote ‘yes’ to industrial action, what happens next? The first day of action is planned for 30 November 2011, starting at midnight and continuing for 24 hours but you should not actually take part in industrial action until called to do so by the union. You and your branch will be notified if any further action is planned. As always, UNISON will make sure there is essential services emergency cover where necessary. Shouldn’t strike action be a last resort? Yes – and it is. UNISON never asks members to strike lightly: we know it is a serious step. But as general secretary Dave Prentis said when announcing the ballot: We’ve been talking to ministers for eight months. “We’ve been patient, we’ve co-operated. But there comes a time when we say: ‘Enough is enough’”. What are my rights if I go on strike? Employees are protected from dismissal during the first 12 weeks of any lawful, balloted, official industrial action. During these 12 weeks the protection is absolute. Any dismissal, regardless of how long the employee has worked, or their age, is automatically unfair unless a tribunal decides the dismissal was not to do with the industrial action.
If employers decide to deduct pay from those taking strike action, your branch should seek a local agreement that this is no more than one day’s pay for a one-day strike. If you are absent on sick leave when a stoppage of work starts, you keep your right to statutory sick pay during the industrial action. If you report sick on the day the action starts, the employer is likely to make their own judgement on whether you are on sick leave or on strike. UNISON does not regard anyone who takes annual leave on strike days to be taking part in the strike. What should I do if I’m not involved in the ballot or any action? If you’re not taking part in the strike because you’re not part of the dispute, you can still support your colleagues who are. Show your support for public sector pensions by talking to friends and colleagues about the campaign, writing to your local paper and wearing a sticker on the proposed day of action – 30 November.
act now
Find out more about pensions and the threat to them at: unison.org.uk/protectourpensions or on the UNISON Facebook page at facebook.com/unisontheunion. Find out how to get involved in the campaign at: unison.org.uk/pensions/getinvolved.asp PENSIONS EDITION 2011U MAGAZINE
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JANE
Why I’m voting
CHRIS
YES
Members explain why they’ll vote yes in the ballot for industrial action. Jane Carolan, housing worker from Glasgow I think it’s completely unfair particularly to women. We always knew there was going to be equalisation in the state pension age but the rate at which it has accelerated means that I personally know women who started in local government when they were 18, who’ve worked in local government for 30 years and who are now facing another 18 years before they get a pension. They’re going to have a working life of 48 years. I think that it’s completely unfair and the changes that are coming in mean that for all of that they’re going to get a much worse pension. Certainly the people that I’ve been working with have seen that the workforce has been reduced, they’re trying to do the same job with less resources, they haven’t had a pay rise in some time, so the fact that their pensions are being changed in such a way and they face such a long time before they get them really means that this change to their terms and conditions is the last straw. They really now think you cannot just say that it’s unfair and do nothing – we have to actually make a stand on it. Remembering back to when I was starting work, people actually encouraged you to join the scheme because they would tell you it was a good deal. If there are not people actively in the workplace promoting it then I think it’s going to be more difficult to keep people coming into the scheme. I think that with a lot of people who work in public services the fact that there was a decent pension at the end of the day did count as part of the overall 4
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remuneration package. They might not have called it that, but that’s what they thought about it. If the pensions aren’t there, it’s going to be much more difficult to attract people into public services and that’s going to be a problem. Chris Tansley, a social worker from Nottingham The main reason I’m voting ‘yes’ is that this is a tax on public sector workers. I think it’s completely unfair. I don’t see why we should have to pay for the state of the economy, particularly when we didn’t cause it in the first place. It’s quite clear that the extra 3% that they want to get from public sector workers isn’t going to go back into the pension schemes, so I think their argument that it’s because of longevity of the schemes falls flat on its face. If they were concerned about the state of the schemes, they’d be saying that they wanted additional money to put into them, but the money’s going straight into the Treasury coffers. It’s going to offset council tax going down. It’s completely unfair and unjustified. What worries me is the state of the pension scheme. The government has not, I don’t think, woken up to the fact that the local government pension scheme, which is the one I’m in, is a funded scheme where the investments from that are the fourth highest investments in industry and commerce in this country. If it does start to collapse, which is my fear, it’s going to have a hugely detrimental effect on the economy.
Gloria Hanson, information referral officer/adult social care worker from London I’ll definitely be voting yes, and to everyone that I know I’ll be saying you need to get out and vote. You might not think you need it now, if you’re young – but just think that the average pension for a woman in the local government pension scheme is £59 a week. How can you live on that? When you’ve been working all your life and paying into a pension you deserve more than that. I’ll also be encouraging members not to leave the scheme, even if the contributions are higher, because if the scheme collapses there’ll be a knock-on effect. If too many people opt out of the scheme and it goes down, it’s going to affect every single man, woman and child. Carole Maleham, a driver for museums and arts in Rotherham I’ll be voting ‘yes’ because I entered into an agreement with regards to my pension and, if it’s broken, there should be trouble. I should be looking forward to my retirement – not dreading it. I’ll get £3,000 a year – because I worked part time, I wasn’t allowed to join the pension scheme for years, and then I couldn’t afford to buy extra years because I was on such low pay. They say you should save towards your retirement – I was saving towards it with my pension! I can see myself going to work on my zimmer frame.
GLORIA
CAROLE
ELEANOR
CLARE
LINDA
PHOTOS: SARAH TURTON & AMANDA KENDAL (CAROLE)
Eleanor Smith, theatre nurse from Birmingham and UNISON’s president I’m Eleanor Smith, I work in the health service and I’m a theatre nurse. I came in as a student when I was 19 and I’ve been there 30-odd years. But now, what I thought was my retirement age is going to be extended. Not only that, but they actually want to make me pay more and yet I’m not actually going to see that additional money in my pension when I retire. And what about the next generation? Why are they going to have to struggle more to be able to have a pension? It’s not acceptable to say there isn’t enough money, when there is. We’ve already been through the pensions choice exercise in the NHS, which we discussed and negotiated with the last Labour government to make the NHS scheme affordable, so why are ministers now saying that it’s not? It’s just that they want to dip their hands in to help pay off the deficit, which we didn’t cause in the first place. As public sector workers, because we’re always going to have to rely on the taxpayer to pay our wages – I’m a taxpayer myself – our wages will never be hugely inflated, so one of the benefits that we had was to have a decent pension and now they want to take that away. When I came into the nursing profession it was because it was a vocation and it was something I really wanted to do – it wasn’t about the money, but the one thing my mum always said was: “At least you’ll have a good pension at the end of it”, and now that’s going to be taken away.
Clare Williams, health service worker I’ll be voting yes in the ballot because as a public sector worker what we’re facing is unprecedented. To be looking at increasing our contributions by over 50% whilst expecting people to work longer is completely unacceptable. Public sector workers are working extremely hard, they didn’t cause the deficit and many really, really cannot afford any more financial pressures or an increase in their pensions. Linda Hobson, critical care nurse from Newcastle We shouldn’t have to bear the brunt of the banking crisis with a 50% increase in our contribution rates, and none of that extra money going back into the pension scheme. I’m a part-time worker but I’m not protected from increased contributions. I’ll pay the same higher contribution rate as if I worked full-time. I can tell you that nurses are extremely angry. Pensions is something they seem so passionate about. In critical care we work 12 and a half hour rotational night and day shifts. It’s hard. It’s the thought of the pension that’s keeping us going. But to expect us to still be doing those shifts at the age of 67 just seems unfair. I’m not militant – but all of us nurses are very, very angry. We know you have to draw that line, and that means voting yes. In critical care we know that the services that need to be protected will be protected. But nurses of all ages, even ones who are coming up to retirement age who won’t be affected themselves, are supporting this campaign.
THE REAL PENSION FACTS • If it closed today, the local government pension scheme could still pay all its liabilities for 20 years. • The Treasury gets £2bn more in NHS pensions contributions than it pays out in benefits every year. • Proposed pension contribution increases could lead 350,000 people to opt-out of public service pension schemes. • The average pension for local government workers is around £4,000 a year – hardly gold-plated. • The average pension for NHS workers is £7,000 a year – hardly gold-plated. • The bosses of Britain’s largest companies have an average pension of £224,121 a year – the real gold-plated pensions. • The bosses of Britain’s largest companies have an average pension 29 times bigger than the average public sector pension. • Half the women pensioners in the NHS scheme receive a pension of less than £3,500 a year – hardly gold-plated.
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Pensions: busting the myths Threats to public sector pensions could mean that your retirement is at stake – make sure you can tell fact from fiction. MYTH – People are living longer which
MYTH – We’re all in it together. Everyone
means they’re claiming their pensions for longer – this needs to be addressed. BUSTED – The schemes were revised to take account of this three years ago – so scheme benefits and costs are now 25% lower. In addition, life expectancy has increased but less so for manual workers and the low paid.
has to make sacrifices right now – why not public sector workers? BUSTED – We are all facing cuts to our public services – on top of this public service workers are facing unprecedented job cuts and a pay freeze. Is it fair to ask them to pay an average 3% more from their salaries on top of all that in return for a pension with worse benefits? We will all end up paying more tax if people drop out of the scheme to end up relying on the state in their old age.
MYTH – There’s a big public sector
pensions deficit that has to be repaid. BUSTED – There is no funding gap – the
public sector schemes were assessed for long term risk and adjusted accordingly three years ago and are now very secure. Both the local government pension scheme and NHS pension scheme are currently cash rich with income far exceeding outgoings – some £2 billion in the case of the NHS pension scheme. MYTH – The proposals mean that those
earning over £15,000 pay around 3% more each month – that’s not very much is it? BUSTED – 3% of your pay is a significant chunk of income. Pension scheme members currently pay around 6% of their salary into their pensions – adding another 3% to this means increasing the payments by around half again. The Local Government Association is even worried that this would lead public sector workers to opt out of pension schemes and threaten their affordability.
MYTH – It’s not fair, why should the public
sector get good pensions when the private sector doesn’t? BUSTED – The average director of a FTSE 100 company has a final salary pension worth £3.6m or £174,963 a year, while the average occupational pension generally is £9,500 a year and the average public service pension is £7,800 a year. That’s the real unfairness. UNISON thinks everyone deserves an adequate pension, including workers in the private sector. We should improve bad schemes rather than make good ones bad. Providing adequate pensions means that fewer people will be receiving welfare handouts after retirement, which would cost the taxpayer more money in the long run. MYTH – Public sector workers have it too
good with huge pensions. BUSTED – The average public service
MYTH – Public services and public service
pensions are causing the financial crisis. BUSTED – It was the banking sector’s reckless risk taking and excessive greed that caused this global recession. 6
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pension is around £7,800 a year, for women working in local government the average is £2,800 a year, while the median for women working in the NHS is £3,500 a year: hardly huge pensions.
Saving towards an occupational pension in many cases means a person is receiving fewer welfare benefits during retirement, saving the taxpayer money. MYTH – Taxpayers are paying for public service workers’ pensions. That’s not fair. BUSTED – Everyone’s taxes are used to pay for all public services – stethoscopes in hospitals, the salaries of primary school teachers, people to change the light bulbs in street lamps, and part of these people’s pay is their pension. A pension is part of someone’s salary package and is no different than an annual salary, a car, or the London weighting allowance. It’s not fair to change something in a job contract after someone accepted the job. One in five people working in the UK works in public services. They are taxpayers too. MYTH – Public service workers retire at 60. BUSTED – The normal retirement age in
many of the public service pension schemes is already 65. Raising the retirement age hurts some people more than others. In general we’re living longer, but that doesn’t mean everyone will have the same quality of life. Many public service workers have jobs that are physically demanding or stressful, making it difficult or even impossible to continue working into old age. Similarly many low paid workers simply don’t have the option of retiring early because they can’t afford it.
PENSIONS IN PLAIN ENGLISH We cut through the jargon so you can understand the pension debate better. Defined benefit (DB) pension scheme
A scheme that commits to paying a specified amount to each member upon retirement depending on years of service and salary. Both final-salary and career average (CARE) schemes are defined benefit schemes. Defined contribution (DC) scheme
A pensions scheme where how much you pay in each year is defined, but the pension you get at the end cannot be predicted. Basically, someone retiring when the stock market is high is likely to get a better pension than someone retiring when the market is low. Charges can mean that for every £1 paid in, as little as 40p is available to buy a pension. Final-salary schemes
These are schemes where your pension is a proportion of your pay near to your retirement. The Local Government Pension
Scheme and the NHS Pension Scheme are final-salary schemes. Funded scheme
A pension scheme where contributions are put into a fund, invested and paid out as pensions and benefits as they fall due. The Local Government Pension Scheme is the only funded public service pension scheme (compared with pay-as-you-go schemes). Index-linked pensions
Pensions are increased each year by the cost of living, usually measured by the Retail Price Index or the Consumer Price Index. The government decided to link public sector pensions to the CPI instead of the RPI from April 2011. The RPI is higher than the CPI because it includes the costs of housing so in simple terms members have received an increase of around a third less this year.
Pay-as-you-go (PAYG) schemes
A public-sector pension scheme where benefits (pensions) are paid out of current income (contributions). There is no separate fund with money in it. These are also known as unfunded schemes. The NHS Pension Scheme is a pay-as-you-go scheme.
act now
If you are eligible to vote in the pensions ballot why not get your picture taken holding up the I’m voting yes poster over the page. You may want to ask colleagues, friends and family to be in the picture with you. Send the picture in to us at action@unison.co.uk and we’ll add it to the vote yes picture gallery on the UNISON website. PENSIONS EDITION 2011U MAGAZINE
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I’m voting
YES
to protect my pension