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Civil service compensation scheme - December 2010 Q&A

How will the new CSCS terms affect me?

The Government’s proposed changes to the civil service compensation scheme (CSCS) would tear up members’ accrued contractual rights and drastically cut compensation payments in the event of redundancy, whether compulsory or voluntary.

The overwhelming majority of PCS members of the scheme would be worse off than under their existing entitlements, and all would be cheaper to make compulsorily redundant.

For a full breakdown of the new terms, see Annex 1

Why is PCS recommending rejection of the new terms?

The new terms are worse for many Civil Servants compared to existing terms. Currently the majority of civil servants have an entitlement of up to 3 years salary if made redundant and under age 50. For those over 50 they have an entitlement of early access to a non reduced pension with service enhanced by up to 6 2/3rds years up to age 60 in a compulsory situation.

In summary:

  • The government’s changes to the CSCS would cut the entitlements of an overwhelming majority of PCS members
  • Everyone’s job is under greater threat than ever before
  • The more cuts in the CSCS, the more risk of job losses
  • Most voluntary severance packages will become less generous, and all will be discretionary
  • Compulsory terms will be worse for all existing members of the scheme
  • People facing privatisation would transfer with far less protection because their terms will have been cut
  • The government also want to cut the notice periods for redundancy and the time taken to find ways of avoiding redundancy

Has PCS engaged in negotiations? What happened?

In May, following members’ national action, we won a victory when the High Court ruled that the Labour government had acted unlawfully when it tried to impose, without PCS’s agreement, a new scheme which left many members worse off.

Since then we have met with Ministers and senior officials of the new Coalition Government to try to find an agreement which would protect members’ existing entitlements and provide acceptable redundancy protection terms for members in nuvos.

Unfortunately, negotiations have not been successful in protecting the majority of our members. We set out proposals, within the cost envelope set by Francis Maude, to cap redundancy pay, at a level which would provide sufficient resources to guarantee accrued rights to those in a redundancy situation. The Minister rejected these.

Sadly some other unions representing a minority of civil service staff have settled for what the Government is seeking to impose, and is changing the law to do so. Even more disappointingly, both the Cabinet Office and Prospect have alleged that PCS has failed to engage in negotiations. This is false.

What have other unions done?

PCS is by far the largest civil service union and rejects the proposals as they would make the majority of our members worse off. The second largest union, the Prison Officers Association, is also balloting its members to reject the proposals. Together we represent more than three times the civil and public
servants covered by the CSCS than the other unions combined.

Unfortunately some of the other unions, including Prospect and the FDA have again been prepared to accept a poor deal for their members. We do not believe we should, not least because it would impede any legal action we could take against the new terms.

If members reject the new scheme what does PCS intend to do

The bigger the vote to reject the changes the better position we are in as a Union going forward. PCS has already given evidence to the Cross Party Parliamentary Human Rights Committee which has stated that the rationale for the changes have not been properly justified. Once the proposals are laid before parliament – this  will happen after the Superannuation Bill receives Royal Assent later this month or early January – PCS will submit a case for a further Judicial Review to the High Court. PCS will argue that that the changes are incompatible with the Human Rights Act.

If we are successful Government will then have to respond. But it is possible that the case will go via the British Courts and finally be decided on in the European Court of Human Rights.

I have been told that the proposed scheme is better for some staff.

Every member’s job will be made more vulnerable to redundancy and privatisation as a result of these new terms.

Staff in NUVOS who started work after July 2007 are not covered by the existing CSCS. PCS pressed hard for them to be included but this is a once and for all change and all staff will be affected by the cap of 12 months or 21 months pay.

PCS welcomes the £23,000 underpin for the lowest paid members. Although everyone will be  limited by the caps on service. We accept that the old scheme had to be reformed particularly on the grounds of age discrimination.

If I am within 10 years of pension age - Over 50, can I have access to an unreduced pension?

Yes but only if you take voluntary redundancy namely the better terms. Your pension will not be actuarially reduced and you will have to use all or some f your redundancy payment to make up any shortfall. If the redundancy payment isn't enough it will be topped up by your employer in a voluntary redundancy situation. If your employer is making compulsory redundancies it may do this but doesn't have to.

Staff aged over 50 who are in classic or classic plus or premium schemes (i.e. in service before April 6 2006) can opt for an unreduced pension on redundancy/early retirement. For those joining the civil service after 2007 the age is 55 years.

The term compensation refers to any compensation payment due under the formula, 1 month for each year of service capped at 21 months in a voluntary situation or 12 months in a compulsory situation. Pension refers to annual pension and the pension lump sum.

However, there are three scenarios for over 50’s or those in classic, (55 in nuvos)

a) unreduced pension including lump sum using compensation payment sometimes involving a top up from the employer to buy out any actuarial reduction. 

b) taking compensation payment and leaving pension including pension lump sum deferred until pension age like younger people

c) taking a compensation payment and an actuarial reduced pension and pension lump sum

Some of the choice will be with the employer some with the individual.

For those approaching pension age (from 58 years and 9 months for those in classic) any compensation is tapered (reduced) so that no-one aged over pension age can receive more than 6 months compensation. The reason the employer claims that the 6 months payment is considered fair is that a redundancy payment is a cushion before another job.

Once people reach pension age they receive a pension plus a compensation payment up to 6 months pay, this is the equivalent to statutory redundancy pay. PCS are considering legal implications of this regarding age discrimination.

I am part-time how does it affect me?

Part-time service will be calculated with full-time equivalent earnings and reduced service as pensions are calculated. However, the cap is also reduced. The maximum that could be offered to a part timer is that of the full timer but scaled down to reflect the full career ratio of part-time to full-time service.

I am partially retired how does this affect me?

Where someone has taken part of their pension and carried on working reduced hours their full reckonable service will be used to calculate benefits.  The pension age issue is likely to mean for most an immediate payment of pension and 6 months pay will apply. 

What happens if I am re-employed?

Where someone receives a severance payment and then gets a job with a civil service employer or somewhere covered by the civil service pension arrangements within the lesser of:

a) 6 months or
b) The notional period of the severance payment,

The redundancy payment will be required to be repaid pro-rata. If the new job pays less than the old job, then the repayment will be less. In cases where the individual chose to take their pension without reduction then the repayment figure is based on the redundancy payment that would otherwise been available.

Re-employment within 28 days would mean immediate re-payment of any redundancy and service would count as continuous.

I am under threat of redundancy what do the changes mean to me?

Should the changes be introduced this will be the scheme it is likely that you will be offered. Current arrangements apply until the new scheme is introduced. PCS policy is to oppose all compulsory redundancies and this is what we aim to achieve. A bigger vote against the proposals will show that members support this objective as the changes make it cheaper for the employer to dismiss people.

One of the main concerns in this is the discretion over voluntary schemes that employers have, the ability to discriminate between groups of members and the pressure those effected by caps will have to go voluntarily so not to lose out in a compulsory redundancy situation.

Rejecting this offer is not just about the terms but will help PCS challenge those we believe are unfair.

I understand that Government may introduce poorer terms if PCS rejects these namely those in the Superannuation Bill of 12 months compulsory and 15 months voluntary.
 
The Government are threatening to introduce the lower cap which is in the Superannuation Bill going through Parliament at the moment if one or more unions reject the offer. PCS believe members should be able to vote without threats. 

There are legal arguments supporting our case. PCS believe that if we recommended this to members when it clearly loses entitlement to a much higher service cap that we would not be representing our member’s interests. PCS did try to keep negotiating for a long time after the other unions had split off to go it alone. Our proposals gave a cash cap and reserved rights to long serving staff. They were dismissed by the Government but were genuinely offered by us for serious consideration.

Any other questions

If you've got any other questions on the compensation scheme, drop us an email on cscsqueries@pcs.org.uk

Annex 1

There are two distinct arrangements for the new terms voluntary and compulsory. 

Feature of scheme Compulsory Voluntary
Service accumulator 1 months pay for each year’s service Usually 1 months pay per years service but employers have discretion
Cap on the accumulator for those under 60 (65 in nuvos) 12 months pay (could be less for those with part-time service) 21 months pay (could be less for those with part-time service)
Cap for those over pension age 6 months 6 months but again departments will have discretion not to offer this but must offer 3 months-check
Protection for low paid Underpin of £23,000 for all calculations of anyone earning less this figure must apply. Underpin of £23,000 for all earning less this figure must apply to calculating their payments.
Over 50s (55 in nuvos) Early payment of pension unreduced may be permitted Early payment of pension unreduced must be permitted
Notice period 3 months Usually 3 months depending on contract

 

Any other questions?

If you've got any other questions on the compensation scheme, drop us an email on cscsqueries@pcs.org.uk

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