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Pensions update

20 January 2012

The Government has offered unions a new scheme for the civil service which raises the pension age, increases contribution rates and cuts pension payments - but it refuses to negotiate on these issues, only to talk about how to implement them.

PCS has rejected the government's offer. Read on to find out why and what we're doing about it.

PCS stands firm for fair pensions

In the run-up to the mass co-ordinated strike on 30 November the government offered some minor concessions: limited protections for those within 10 years of retirement, and improved accrual rates. But ministers did not agree to negotiate on increasing contributions, raising the pension age, and reducing pension values to pay for the budget deficit.

Following the strike – which was the best supported in PCS’s history and involved more than two million public sector workers – the government sent unions an ultimatum on 15 December, saying we had to sign up to the deal on offer or be excluded from future discussions. We refused to be bullied in this way but, regrettably, some unions have accepted the government’s proposals as a basis for agreement on new pensions schemes.

Building a strategy for 2012

Our national executive committee (NEC) has unanimously rejected the government’s offer, and agreed that further co-ordinated action will be necessary unless ministers agree to negotiate on the key issues. Following the threat of legal action, PCS will now be involved in the talks, but the government continues to refuse to discuss pension age, contributions or indexation.

We will be meeting the other unions that have not accepted the government’s offer to discuss the potential for an ongoing campaign, including the possibility of further industrial action.

Our NEC will reconvene once these discussions have been held to take decisions on action and how to proceed, in consultation with members.

We will not be forced into accepting that public servants should pay more and work longer for less to pay for economic problems caused by the failures of the banks and politicians. And we will continue to work with other unions to achieve fair pensions for all.

The government’s offer explained

On 15 December the government gave unions an ultimatum: a ’final offer’ of a new pensions scheme that would mean members paying more and working longer for less in retirement.

Our executive unanimously rejected this offer and reiterated its view that any settlement would require genuine negotiations on the core issues of increasing contributions, raising the pension age and changing inflation indexing.

The new scheme

The new pension scheme offered by the government is based on the nuvos scheme, which is based on a career average salary. This average is calculated by taking a percentage of each annual salary and uprating it by inflation. But, by cutting the inflation indicator from RPI to CPI, the government at a stroke reduced the value of the existing NUVOS scheme. However, what’s on offer is worse than the current NUVOS scheme, as explained below.

The government plans to close the current civil service pension schemes (Classic, Classic Plus, Premium and NUVOS), to be replaced by a new scheme on 1 April 2015. Those within 10 years of pension age on 1 April 2012 would remain in the current schemes though indexation changes mean they would get less in retirement – all others will be offered the new scheme. Those just over 10 years from retirement will get extra accrual in existing schemes before being transferred into new schemes.

Pay more

There are two elements to the government’s plans for increasing contributions. The government has confirmed plans to impose an increase in contributions for all public sector pension members (including those within 10 years of retirement), by an average of 3.2% of salary,phased in over three years, starting from 1 April 2012. This means that from 1 April 2015, the contribution rate that would apply to thenew scheme would be an average of 5.6% of salary, with some protection for the lowest paid.

Work longer

The new scheme would have a pension age (the age at which scheme members can receive an unreduced pension) in line with the state pension age (SPA), which will rise to 68. How this would work in practice has still to be discussed. Classic and Premium schemes have a pension age of 60, and NUVOS has a pension age of 65. People born on or after 6 April 1960 but before 6 April 1961 will have an SPA between 66 and 67. People born on or after 6 April 1961 will have an SPA of 67 or higher.

Get less

After retirement, pension increases will increase by the CPI inflation measure, rather than RPI, which will mean that over a normal retirement, pensions will be worth up to 20% less.

Despite the concessions made by the government on 2 November – in response to the threat of mass co-ordinated action – fundamentally nothing has changed since: the government’s offer would mean nearly all members would pay more, work longer and get less, and even those within 10 years of retirement would still pay more and get less.

Calculate what you could lose

The PCS pensions calculator gives you an estimate of what the government’s proposed pension changes will cost you – both between now and your retirement, and after you retire. The government’s current offer would mean that the average civil servant would pay more than £60 more a month, work up to eight years longer and still get a smaller pension.

Our pensions are affordable

Public sector pensions are affordable now and in the future. Even the far from independent report the government commissioned from Lord Hutton confirmed the costs are falling from 1.9% of national income to just under 1.4% by 2060.

It is only four years since our pensions were significantly renegotiated with the previous government in a deal that the National Audit Office said set them “on course to deliver savings and stabilise pension costs”.

The coalition is imposing a tax on public sector workers to pay for the mess made by the banks and to make public services easier to privatise. Treasury minister Danny Alexander told parliament in December that “the new pensions will be substantially more affordable to alternative providers”.

In the same speech he also misled MPs, telling them PCS had “walked away from talks”. In fact, in response to our threat of legal action and pressure from the TUC, the government retreated and will now involve us in further talks.

What other unions are saying

Ministers initially claimed PCS was isolated. But at least 10 unions, representing over one million public sector workers, have refused to sign up to the government’s ultimatum. We will be meeting with those unions to plan the next steps in the campaign.

In the civil service

Unions representing over 80% of civil service union members have rejected the government’s offer: the Prison Officers Association has refused to sign up, and Unite and NIPSA – representing many civil servants in Northern Ireland – have rejected the offer. Only the GMB, Prospect and FDA have signed up to the heads of agreement.

Elsewhere in the public sector

Education: the NUT and UCU – unions that took action alongside us on 30 June – have refused to sign the offer, as has the NASUWT and unions representing teachers in Scotland, Wales and Northern Ireland. Only one teachers’ union – the ATL – and the headteachers’ union have signed. Health: most unions, including Unison and the GMB, have signed up to the government’s offer. Unite’s health committee unanimously reject the offer.

Local government: the government has offered to defer contribution rises until at least 2014. Nevertheless Unite and FBU have rejected the offer as it would still mean working longer for less. Unison and GMB have accepted the government’s terms for discussion on a new scheme.

PCS will continue to work with all those unions that wish to stand firm to defend members’ pensions. We will update members shortly on the next steps in the campaign.

What you can do

  • Speak to your local rep about how to get more involved
  • Download our Fair Pensions for All pamphlet   Fair pensions for all pamphlet
  • Contact your local MP and ask them to support our campaign
  • Ask colleagues who are not PCS members to join our union
  • Keep checking the PCS website for updates

Download this update as a PDF

  Pensions update