19 July 2021

Pensions robbery: the real cost to members

The government is blatantly attempting to snatch away members’ rights to have their pension contributions reduced by at least 2% and see their benefits improved – but PCS is resisting and planning legal action.

PCS members are being robbed of around £1,000 each from their salaries as well as improvements to pensions benefits that they are owed.

Coming on top of another unnecessary and insulting pay freeze, members will be furious about this deliberate move by the government. In the coming months, we will be asking you to get involved in our campaign to right this wrong.

Why is this happening? Because there has been outrageous and unjustifiable government interference in the Civil Service Pension Scheme’s valuation and cost cap processes in recent years

The original outcome of the scheme’s 2018 valuation was declared more than two years ago. It confirmed PCS’s view that the future cost of the scheme had originally been exaggerated for political reasons. The cost of the scheme had fallen below the ‘floor’ of a cost control mechanism (called the ‘cost cap’) which meant there was money to spend on reducing employee contributions and improving pension benefits.

This produced recommendations that members’ contributions should be reduced by at least 2%, and that there should be improvements in benefits. Since then, the government has behaved outrageously:

Outrageous act 1: Avoiding the valuation

The government suspended the valuation process that was carried out in 2018 and should have seen your contributions reduce from April 2019. It used uncertainty around a legal case it lost – a judgment of unlawful age discrimination in the way its 2015 public sector pension changes were introduced (the McCloud case) – as an excuse for holding back those benefits from scheme members until a solution was worked out.

Outrageous act 2: Trying to make the victims pay

When they restarted the valuation, the government insisted the full costs of the discrimination remedy for the McCloud case would be included in a new revised valuation. This would mean members paying the full cost of their unlawful actions. PCS believes the way they want to revise the valuation will mean there is no longer a ‘cost cap’ breach, effectively cancelling the cut to the employee contribution they owe to members.

The Treasury is now planning long-term proposals that would make it harder for future valuations of the scheme to trigger changes to member contributions and benefits, in a move PCS has called “cynical” and a “betrayal”. These involve changing the cost cap mechanism in ways that tear up the original basis of the cap, making it likely that there will never be a breach in future.

Outrageous act 3: Adding insult to injury

Compounding this already diabolical approach towards scheme members, the government is proposing that the full cost of the remedy will be loaded into the current four-year valuation period, rather than being spread over a longer time. This is completely unjustified, given that most members will not decide on their portion of remedy cost until they approach retirement.

Union actions: Building our case

Along with other unions we have protested vigorously at this “make the victims pay” approach.

While work is now being done to avoid the “no breach” outcome, our legal case for judicial review to strike out the remedy costs from the valuation entirely is being prepared in final form.

PCS is working closely with other unions and will be pressing for a hearing of our case in the summer.

How much of your pension has been stolen up to April 2021?

Annual salary                                         Stolen contributions

£15,000                                                  £600

£25,000                                                  £1,000

£35,000                                                  £1,400

£45,000                                                  £1,800

Get involved

Your branch will be asked to formulate an organising and campaigning plan, including an all-members meeting around the issues of pay and pensions – ask your local reps how you can get involved where you work.

Look out for PCS region/nation briefings on pensions and how to campaign around the issue.

If you are not already a rep, why not get involved in the union? Speak to your rep about becoming a PCS Advocate or email organising@pcs.org.uk (mailto:organising@pcs.org.uk)

Recruit a friend or colleague to PCS – together we are stronger. Look at our why join page. (https://www.pcs.org.uk/whyjoin)

Read our pensions campaign page.  (https://www.pcs.org.uk/pensions)

This article is taken from PCS People issue 2, 2021. (https://365pcs.sharepoint.com/:b:/s/pcsresources/EbNgDVXNSH9Cr7Mwbuo78PYBW40PIbkQ5cCzgTK0_PKlfg?download=1)

Source URL: https://www.pcs.org.uk/news-events/news/pensions-robbery-real-cost-members