You are:

ARMS latest news

Emergency Budget 2010

The Emergency Budget took place on 22 June. Some of the major provisions are laid out below.

Indexation of Public Service Pensions

From April 2011, the indexation of public service pensions will be switched from the retail prices index (RPI) to the Consumer Prices Index (CPI). Under normal circumstances, the increase in the CPI is lower than that for the RPI. For example the RPI is currently 5.1 per cent, compared to 3.4 per cent for the CPI. We estimate that a public service pensioner retiring at 60 with a £10,000 a year pension, will lose out by almost £49,000 over a 26-year retirement if there is a 1 per cent a year difference between CPI and RPI.

We view this change of indexation as unacceptable. The Coalition Government had stated that accrued rights would be protected. We had expected that this would include continued indexation, via the 1971 Pensions (Increase) Act, to RPI throughout retirement. Phillip Hammond MP only on 27th April stated that the Conservative party ‘has no plans to change the current index-linking of pensions in payment’. This assurance has not lasted two months and paints the new Government in a very unfortunate light.

CPI indexation will also be applied to all benefits other than the basic state pension, or the minimum income guarantee element of pension credit.

Basic state pension

As expected, the Chancellor announced the restoration of the earnings link for the basic state pension from April 2011, with a ‘triple guarantee’ that the basic state pension is raised by the higher of earnings, prices or 2.5 per cent. The ‘prices’ element will be RPI in April 2011, but CPI thereafter. We are pleased with this change as it restores the earnings link, but we obviously oppose the switch from RPI to CPI.

Age-related personal allowances

While there was an announcement that the basic personal allowance would be raised from £6,475 to £7,475 in the 2011-12 tax year, there was no announced increase in the age-related personal allowances.

Concessions linked to state pension age

The Government has confirmed that the age at which these benefits can be claimed (such as Winter Fuel Payments, free off-peak local bus travel, eye tests and prescriptions) will rise in line with the female state pension age, which is set to increase from 60 to 65 over the next decade.

Increase in state pension age

The Government has announced a review of the implementation date for when the state pension age will rise to 66. Under current arrangements, the state pension age is set to rise to 66 between 2024 and 2026. We oppose an increase in the state pension age.

Annuitisation of Savings

The Government has confirmed that it will end the existing rules that create an effective obligation to purchase an annuity by age 75 from April 2011.

Problems with tax codes

HM Revenue and Customs (HMRC) have said that there are problems with some tax codes they have already issued. These are tax codes for the tax year 2010/2011 which starts on 6 April 2010. There is a chance there is something wrong if you get a 2010/11 coding notice which:

  • refers to a job or pension that finished before 6 April 2009;
  • If you get more than one coding notice for the same job ;
  • shows code D0 when your total income from employment and pensions is less than £43,875;
  • looks different from coding notices you received for 2009/2010. This might be, for example, if you got a code beginning with the letter K for the first time.

If you're worried about your tax code, or you think it is wrong, you can check it using HMRC guidance. This guidance is included with your coding notice, or you can find it on the HMRC website.

Coding notices are issued by the HMRC and you will need to contact them directly on 0845 300 3949. HMRC can then make sure you have the right tax code in time for the new tax year and will inform your pension provider.

There is also a statement on the Capita Hartshead website.

Civil service pension (non) increase for 2010 

The September RPI determines the pension increase for the following April. Since the September 2009 RPI was minus 1.4%, there will ne no Civil Service Pension increase in April 2010, nor will there be any reduction. Civil Service Pensions will stay at 6 April 2009 levels.

There will be an article in the annual pensioner newsletter which goes out with pensioners P60s in April/May time.

Cabinet Office will be issuing EPNs and PCs giving material to APACs and employers to help them answer any staff queries.

Review of Civil Service Pension Delivery

Following an announcement on the 18 November by the Cabinet Office that a new delivery organisation within the Civil Service will provide a full range of services to all members of the PCSPS, the General Secretary has written to the members who will be covered by this new organisation, to reassure them that PCS will take a full part in seeking to protect member’s rights during the transitional period to the new organisation which will be hosted by the Department of Work & Pensions.

PCS has set up an ad hoc grouping of representatives from the Cabinet Office and the Authorised Pension Administration Centres (APACs) to take this work forward and union representatives will be meeting with Cabinet Office on a regular basis to ensure the interests of staff are fully protected.
 

Did you know?

  • 40,000 civil service pensioners receive a pension of less than £1000 a year
  • 61,000 between £1001 and £2000
  • 53,000 between £2001 and £3000
  • 46,000 between £3001 and £4000
  • 38,000 between £4001 and £5000

Hardly gold plated pensions (information from Hansard)

Review of errors in guaranteed minimum pension payments

A review by the National Audit Office of overpayments to public service pensioners totalling £90 million has found a complex and fragmented administrative process, prone to error, and for which there is no clear overall responsibility.

The process requires effective joint working between the parties involved (the five public service pension schemes, HM Revenue and Customs (HMRC), and the Pension, Disability and Carers Service (PDCS)) but they have failed to achieve this.

The overpayments have affected over 90,000 retired soldiers, doctors, nurses, teachers and including up to 19,000 civil service pensioners. Just under 4,000 Civil Service pensioners faced underpayments.

The errors occurred because the pension schemes did not have guaranteed minimum pension information recorded for these members, which meant that the schemes did not apply correct annual cost of living increases.

The five pension schemes involved plan to write-off the resulting overpayments, and those pensioners who were underpaid are now receiving the money to which they were entitled in previous years.

The errors, which affect 6% of pensions being paid to members over state pension age in the five schemes, occurred over many years.

So far, the pension schemes have identified 85,509 individual overpayments totalling £90.2 million, and 4,917 underpayments totalling over £191,000. The pension schemes are still working to resolve more than 26,000 cases and so these figures are likely to rise.

Despite the complexity of the administrative processes involved and the known history of problems – some of the parties involved raised concerns about the process as far back as the mid 1990s - few checks and controls were in place, which meant that missing information on the guaranteed minimum pension went undetected, in some cases for over 20 years. No one party has taken responsibility for overseeing the whole process, ensuring it runs smoothly and resolving errors.

Press notices and reports are available on the NAO website.