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Public sector pension deal outlined by government Public sector pension deal outlined by government
(40 minutes later)
  
An outline agreement for big changes to public service pension schemes has been achieved, Treasury Chief Secretary Danny Alexander has told Parliament.An outline agreement for big changes to public service pension schemes has been achieved, Treasury Chief Secretary Danny Alexander has told Parliament.
After months of negotiations, and a national strike, he said most trade unions had now agreed in principle to new schemes from 2015.After months of negotiations, and a national strike, he said most trade unions had now agreed in principle to new schemes from 2015.
The deals would change pension schemes for staff in the NHS, local government, civil service and education.The deals would change pension schemes for staff in the NHS, local government, civil service and education.
He said this would eventually save the government tens of billions of pounds.He said this would eventually save the government tens of billions of pounds.
"These heads of agreement deliver the government's key objectives in full and do so with no new money since our November offer," he told MPs."These heads of agreement deliver the government's key objectives in full and do so with no new money since our November offer," he told MPs.
However, several trade unions, including the biggest civil service union - the Public and Commercial Services (PCS) union - said they had definitely not signed up to the outline agreements.However, several trade unions, including the biggest civil service union - the Public and Commercial Services (PCS) union - said they had definitely not signed up to the outline agreements.
The National Union of Teachers (NUT), the NASUWT, the University and College Union (UCU) and Welsh teaching union UCAC all said they would not sign. The National Union of Teachers (NUT), the NASUWT (National Association of Schoolmasters Union of Women Teachers), the University and College Union (UCU) and Welsh teaching union UCAC all said they would not sign.
Pickles
There was also confusion when the GMB said it was reconsidering its position regarding the proposals for the local government pension scheme on which a deal was thought to have been all but settled.
Brian Strutton, national officer of the GMB, said this was in the light of "new conditions", thought to be a limit on employers' contributions laid down by Local Government Secretary Eric Pickles. However, Mr Alexander said this was in a letter by Mr Pickles that was sent in error and had now been withdrawn.
The GMB, Unison and Unite said tonight that in light of confusion over the local government letter, they were suspending their agreement, and were seeking an urgent meeting with the government.
Prospect, the second-biggest civil service union said it would continue to "seek improvements" on the government's proposals before it would put the offer to its 34,000 members.Prospect, the second-biggest civil service union said it would continue to "seek improvements" on the government's proposals before it would put the offer to its 34,000 members.
'Final position''Final position'
Mr Alexander told MPs that the progress in negotiations meant that increased contributions, amounting to an average of 3.2% of staff salaries, would be phased-in over the three years from 2012. Mr Alexander told MPs that the progress in negotiations meant that increased contributions, amounting to an average of 3.2% of staff salaries, would be phased in over the three years from 2012.
However, the second and third year of these increases would be reviewed in the light of the first year's experience, in case there had been high drop out rates from staff who could not afford to pay more.However, the second and third year of these increases would be reviewed in the light of the first year's experience, in case there had been high drop out rates from staff who could not afford to pay more.
From 2015 the various pension schemes under consideration will be changed to a career average basis with their normal pension ages rising in line with the state pension age.From 2015 the various pension schemes under consideration will be changed to a career average basis with their normal pension ages rising in line with the state pension age.
He described this as the government's "final position", with the trade unions who now support the outline agreements agreeing not to call any further strikes.He described this as the government's "final position", with the trade unions who now support the outline agreements agreeing not to call any further strikes.
He acknowledged that the draft agreements would now have to be approved by union members and that there would have to be much more detailed negotiations.He acknowledged that the draft agreements would now have to be approved by union members and that there would have to be much more detailed negotiations.
New schemesNew schemes
Mr Alexander said it was "deeply disappointing" that he had not been able to reach any agreement with the main civil service union, the PCS.Mr Alexander said it was "deeply disappointing" that he had not been able to reach any agreement with the main civil service union, the PCS.
Cabinet Office minister Francis Maude later said there was "no intention to divide and rule" in dealings with the unions and it was disappointing that the PCS had "written itself out of the script".Cabinet Office minister Francis Maude later said there was "no intention to divide and rule" in dealings with the unions and it was disappointing that the PCS had "written itself out of the script".
He said the agreements came despite the strike action on 30 November, not because of it.He said the agreements came despite the strike action on 30 November, not because of it.
Mr Alexander described last month's national strike of more than 20 public service unions as an "unnecessary interruption", before outlining the way some of the new career average pension schemes would probably operate, for all staff, from 2015.Mr Alexander described last month's national strike of more than 20 public service unions as an "unnecessary interruption", before outlining the way some of the new career average pension schemes would probably operate, for all staff, from 2015.
The new offer features changes to accrual rates - the rate at which a pension builds up - and how the existing pot is revalued while an employee is still working, to guard against inflation. The terms include:The new offer features changes to accrual rates - the rate at which a pension builds up - and how the existing pot is revalued while an employee is still working, to guard against inflation. The terms include:
  • In the civil service, the accrual rate will be 1/44th of salary, revalued each year in line with the consumer prices index (CPI).
  • In the local government scheme, where negotiations have different parameters, the pension age will be linked to the state pension age but a new career average scheme will be introduced in 2014 - a year earlier than the others - and there will be no increases in employee contributions for all, or the vast majority, of members
  • In the NHS, the accrual rate will be 1/54th of salary each year, revalued in line with CPI plus 1.5%.
  • In the teachers' pension scheme, the accrual rate will be 1/57th of salary each year, revalued in line with CPI plus 1.6% each year.
  • In the civil service, the accrual rate will be 1/44th of salary, revalued each year in line with the consumer prices index (CPI).
  • In the local government scheme, where negotiations have different parameters, the pension age will be linked to the state pension age but a new career average scheme will be introduced in 2014 - a year earlier than the others - and there will be no increases in employee contributions for all, or the vast majority, of members
  • In the NHS, the accrual rate will be 1/54th of salary each year, revalued in line with CPI plus 1.5%.
  • In the teachers' pension scheme, the accrual rate will be 1/57th of salary each year, revalued in line with CPI plus 1.6% each year.
Separate proposals for the police, armed forces, judges and fire service have still to be published.Separate proposals for the police, armed forces, judges and fire service have still to be published.
Mr Alexander promised that if a deal was done there would be no further changes to public service pension schemes for 25 years.Mr Alexander promised that if a deal was done there would be no further changes to public service pension schemes for 25 years.
NHS pensions offerNHS pensions offer
A new offer on NHS pensions was put to the unions earlier this month. Under the updated proposals:A new offer on NHS pensions was put to the unions earlier this month. Under the updated proposals:
  • 530,000 staff earning between £15,000 and £26,557 would be spared any rise in pension contributions next year
  • So would those less than 10 years away from retirement
  • Higher-earning employees would be expected to pay more
  • Staff in areas transferred out of the public sector will retain their right to stay in the pension scheme
  • There would also be an improved accrual rate - the rate at which the value of a pension builds up, within a career average pension scheme
  • The government has also pledged to consult on the impact of changes on staff in the emergency services
  • 530,000 staff earning between £15,000 and £26,557 would be spared any rise in pension contributions next year
  • So would those less than 10 years away from retirement
  • Higher-earning employees would be expected to pay more
  • Staff in areas transferred out of the public sector will retain their right to stay in the pension scheme
  • There would also be an improved accrual rate - the rate at which the value of a pension builds up, within a career average pension scheme
  • The government has also pledged to consult on the impact of changes on staff in the emergency services
Unison is poised to put the government's "final offer" to members of its executive and possibly its members in the new year.
The union said it had made progress on issues such as contribution rates for the low paid and people close to retirement, but other areas had been "a damage-limitation exercise".
Rehana Azam, national officer of the GMB which was also involved in NHS pensions negotiations, said discussions had been "extremely difficult" and a lot of detail still needed to be worked through.Rehana Azam, national officer of the GMB which was also involved in NHS pensions negotiations, said discussions had been "extremely difficult" and a lot of detail still needed to be worked through.
There was also confusion when the GMB said it was reconsidering its position regarding the proposals for the local government pension scheme on which a deal was thought to have been all but settled.
Brian Strutton, national officer of the GMB, said this was in the light of "new conditions", thought to be a limit on employers' contributions laid down by Local Government Secretary Eric Pickles. However, Mr Alexander said this was in a letter by Mr Pickles that was sent in error and had now been withdrawn.