UK Govt Fails to Reach Agreement with Unions
The UK government is facing fresh strikes by public sector workers over changes to their pensions, despite previously reaching agreement with unions over public sector pensions with no additional money from the originally proposed offer.
In December, the UK government announced it had reached agreement with unions over changes to public sector pensions. Chief Secretary to the Treasury Danny Alexander told Parliament agreement had been reached with most unions in the civil service and teachers unions and it was now up to union members to decide their response.
But according to reports, the National Union of Teachers (NUT), National Association of Schoolmasters Union of Women Teachers (NASUWT), University and College Union (UCU) and Public and Commercial Services Union (PCS) emerged among those most likely to take further industrial action to November’s strike.
Workers at the UK Ministry of Defence along with Unite’s local authority national industrial sector committee (LANISC) and Unite’s health sector national industrial sector committee (HSNISC) also rejected the government’s public sector pension proposals.
Key changes are:
• In the civil service, agreement has been reached to revalue each year’s contributions by CPI rather than earnings, allowing an accrual of forty-fourths to be offered. This costs the same as the original offer, but with a configuration preferred by the trade unions.
• The normal pension age will be linked to the state pension age as it rises.
• The Local Government Association and trade unions have agreed that the pension age in the new scheme will be linked to the state pension age. Their preference is to deliver a career average scheme.
• In Health, agreement has been reached to a revised revaluation factor of CPI plus 1.5%, allowing the accrual rate to be improved to one fifty-fourths.
• In Education, agreement has been reached to a revised revaluation factor of CPI plus 1.6%, allowing the accrual rate to be improved to one sixty-sevenths along with modest improvements to early retirement factors.
Graeme Muir, partner and head of Public Sector Practice at actuaries Barnett Waddingham, said: "The main issue with career average schemes—the balance of accrual rate and revaluation rate seems to have swung towards higher accrual rate at the expense of a lower revaluation rate. This means that compared to the previous proposals, scheme members will earn more pension each year, but then it won’t quite grow as quickly as previously envisaged.
"Given the key perception in this dispute about having to apparently pay more for less, we always wondered why the government seemed to overlook the easy option of a higher accrual rate with a lower revaluation rate, which would mean more for more, at least in the short term, and all affordable within the agreed cost envelope." —PSE