Now it s your turn HOW THE BALLOT WILL WORK. Inside PUBLICEYE. Pensions offer goes to ballot after toughest set of talks for 30 years PROSPECT

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1 PUBLICEYE PROSPECT FOR PROFESSIONALS IN PUBLIC SERVICE ISSUE 6 APRIL 2012 Pensions offer goes to ballot after toughest set of talks for 30 years TWELVE months of dispute over pensions have culminated in a final offer to Prospect s 34,000 members in the civil service sector. From April 24, they will be asked to vote on the outcome of the most controversial set of negotiations held by the union with any government for a generation. The offer of a new pension scheme for civil and public servants from April 2015 retains many of the features that caused thousands of members to walk out on strike on November 30. The hike in contributions to an average 5.6%, the link to state pension age and the switch to CPI uprating are all still there. But so are a number of safeguards and benefits negotiated by Prospect, FDA, GMB, PCS and POA in the last five months of talks with the Cabinet Office, Treasury and ministers. These include: a faster accrual rate (1/43.1ths) for building up pension, which will enable most members to take out a pension at least as good as their current pension before state pension age full protection of existing benefits for all members within 10 years of retirement this month, and a choice of tapered terms or a move to the new scheme for members aged STEFANO CAGNONI Now it s your turn HOW THE BALLOT WILL WORK THE civil service sector is balloting on the government s proposals for the pension schemes to apply for most public servants from April This ballot applies to Prospect members of the civil service and by-analogy pension schemes, and the NHS and teachers schemes. Members of the local government and UK Atomic Energy Authority schemes will be subject to separate ballots when proposals for those schemes are finalised. The proposals for the civil service and by-analogy schemes (eg House of Commons, Research Councils) are available from library.prospect.org.uk/id/2012/00388 Separate information is being provided for Weighing it up reps hear details of the final pensions offer at the pay and pensions forum in March (report, p6-7) Inside PUBLICEYE STREETER SAYS p2 CPI SETBACK p3 NUVOS 2015 p4-5 PENSIONS CALCULATOR p6 BRANCH REPS FORUM p6-7 PAY SHORTFALL p8 various flexibilities, including the right after 2015 to draw down pension in the Classic, Premium or Nuvos schemes while continuing to work and earn pension in the new scheme a floor as well as a ceiling for the employer s contribution rate in the new scheme, which would enable substantial falls in the costs of the scheme to be recycled into member benefits the opportunity to retain membership of the PCSPS for members transferred out of the civil service on Listening in Bootle p8 members in the NHS and teachers schemes. There is no agreement between Prospect (or any union) and the government on increases to member contributions from April The government is imposing these extra contributions. Prospect and other unions will continue to oppose this unfair levy on members. The ballot will mostly be conducted online for members for whom we have an address. For those who cannot be contacted by or are known to have restrictions on internet access at the workplace, the ballot will be by post. The ballot will run from April 24 to May 11. IAN COOPER TUPE terms and in subsequent TUPE transfers. Leaders of the union s civil service sector have met throughout the talks to monitor and guide the negotiations, culminating in a pay and pensions forum for 100 branch representatives in London in March. At a sometimes tense meeting, sector president John Streeter explained that nothing further could be extracted from negotiations and that Prospect now had to reach a decision on whether to recommend acceptance or rejection of the offer. He made no attempt to disguise its deficiencies, but said he recognised that the new scheme had come a long way since it was first mooted by the Treasury in 2011 with a 100ths accrual rate. Its terms actually improved on the current Nuvos scheme in several respects, but it was for members to decide whether those positives outweighed the minuses, in particular the rise in contributions. Because of the importance of the issue to members, Streeter told the reps from 42 branches that the sector executive had decided it had to exercise leadership and would not shy away from a recommendation. With reservations, the executive was therefore recommending the offer be accepted by members. The alternative a new campaign of industrial action would require sustained membership support and ran the risk of losing the improvements that had been negotiated to the original offer.

2 2 PUBLICEYE April 2012 BALLOT Only you can judge CHALLENGING DECISION NOW that members have to make up their minds I suspect We ve done our best, says John Streeter. Now it s up to members they will find the decision as challenging as their executive did a few weeks ago, says Dai Hudd, deputy general secretary. we could not have been further No one pretends that we wanted a new civil service away from this time last year. Our scheme or that a higher pension age and CPI indexation younger members may see that as a will do anything to improve the terms of that scheme. benefit. Older members may take the Those changes, however, are being imposed not just on the transitional protection with a sigh of entire public sector but on most workers in the country. relief, while the flexibility of choice for Where the government has very clearly discriminated against public servants is over the increase in pension contributions. To target civil and other public servants for a steep rise in contributions at the same time as four years of real pay cuts amounts to a callous attack on the living standards of members. That is why Prospect has decided to make a campaign on pay, and specialist pay in particular, the cornerstone of THERE S no doubt that it s been a long and difficult journey. A journey on which we had the first national strike in a generation, delivered by the largest turnout ever, in a ballot with a resounding vote in favour. November 30, 2011 proved to be a huge success which brought together members from unions across the public and civil service in a clear demonstration of anger. Since the strike we have made progress which would not have been possible without it. Clearly the contributions issue is still hugely controversial, especially during a prolonged pay freeze. We have written to ministers making clear that no matter what our final decision on the offer we will continue to oppose the levy vigorously. But in other parts of the offer there has been substantial progress. These pages cover the detail but I would highlight that the accrual rate, slightly better than Nuvos, is a considerable achievement which Streeter recommendation only reached after much heart-searching STEFANO CAGNONI those in the middle may be welcomed. In the end, only you can judge. This is the government s final offer and we need to make a decision. Although the executive did not reach a unanimous view on the offer, we were fully agreed that we had a duty to provide leadership and express a view to inform members in the forthcoming ballot. The executive therefore recommends, after the deepest heart searching, that the offer is the best that can be achieved through negotiation and that members vote in favour of acceptance. Of course, the final decision is for you to take in the ballot. Please make sure you vote. our efforts to redress the balance for members in future years. But our executive is surely right to distinguish between the arbitrary Hudd support from members has been crucial nature of the government s pension tax and the actual terms of the new scheme. No change was never an option and from the start we set out to secure benefits for civil servants that would match those in the Nuvos scheme we negotiated five years ago. That aim has largely been achieved and, indeed, improved upon in many important areas. There are also important protections for existing members of schemes and for members transferred out of the service. Thanks to your support over the last 12 months, it is certainly the best deal that can be secured by negotiations and a major improvement on the government s original intentions. A QUICK GUIDE TO SCHEME BENEFITS Type of defined benefit NEW SCHEME APRIL 2015 NUVOS PREMIUM CLASSIC scheme Career average Career average Final salary Final salary Accrual rate 2.32% (1/43.1th) 2.30% (1/43.5th) 1.67% (1/60th) 1.25% (1/80th) Revaluation rate CPI CPI N/A N/A Employee contribution Range from 4.6% to 9% Range from 3.5% to 9.5%* Range from 3.5% to 9.5%* Range from 1.5% to 7.5%* Pension age State pension age Pension lump sum Automatic 3 x pension Trade 1 of pension Trade 1 of pension Trade 1 of pension (can trade pension for for 12 lump sum for 12 lump sum for 12 lump sum further lump sum Early retirement reduction Broadly less than 5% per year Approx 5% per year Approx 5% per year Approx 5% per year Late retirement enhancement Yes Yes No No Ill-health provision Maximum accrual or pension For job immediate payment of pension. For any work immediate payment with service enhanced to state pension age None For job immediate payment of pension. For any work immediate payment with service enhanced to age 65 Pension can be no more than 75% salary For job immediate payment of pension. For any work immediate payment with service enhanced to age 60 Immediate payment of pension with some enhanced service 45 years 45 years Re-employment No reduction Pension may be reduced Pension may be reduced Pension may be reduced * For future contributions in Classic, Premium and Nuvos, see table on opposite page

3 PUBLICEYE April BRANCH REPS FORUM Reps wrestle with final offer percentage contribution as full-timers earning an equivalent salary, which was grossly unfair. He felt the fight had been lost over retirement age and contribution rates. Helen Sage, also PIA, warned part-timers might opt out of the scheme or even out of Prospect. But Elaine Harrison believed her members in the House of Commons would ask: What will the government do if the offer is rejected? While not liking the offer, they were likely to accept because they are far more concerned about having a job. Cathy Collins (Office for Nuclear Regulation) said her members were professionals first and activists second. Most had joined the November 30 strike but were not prepared to strike again. Several other reps reported that some members who had voted for industrial action had not taken strike action on November 30. Martin Pennycook (MOD Acquisition) believed there was no public sympathy for public sector pensions. When on strike, some passers-by had said, You ve got it easy. In his section, there was no stomach for strike action when it was a struggle to have a job. Evan Jones (Welsh Government) said his older members tended to oppose the deal, while younger ones backed it, Above, Jerry Bromfield addresses the meeting; inset, sector president John Streeter with vicepresident Geoff Fletcher believing they would pay more to get more. I suspect our branch would vote to accept. Norman Nicholson said his members at Defence Estates were most interested in the Fair Deal guarantee, because they faced privatisation and wanted to keep their civil service pensions. From the Department of Health, Howard Malin felt that November 30 had involved the whole public sector in a symbolic gesture rather than an exercise of industrial might. NO EASY ANSWERS RESPONDING to questions about the projected 47% cut in the value of a civil service pension, Dai Hudd pointed to the higher accrual rate in the new scheme. If more people retired later, the government would not get its projected savings, a fact highlighted by the Institute of Fiscal Studies. The deputy general secretary said Prospect had sympathy for the situation facing parttimers, but European case law supported the government s approach. This also coincided with legal advice received by all unions. Pensions officer Neil Walsh said now the final offer was out, individuals should consider the impact on them personally and a calculator would be made available to assist. Paul Noon said if the scheme was accepted by Prospect, GMB and FDA, the government was likely to introduce it. But if Prospect rejected it, he feared an inferior scheme would be imposed, without transitional protection, the Fair Deal offer What we are asking members is like turkeys voting for Christmas, but are we free range, corn-fed turkeys or battery-farmed? I think this is the best we can get through negotiation and not many members will be prepared to take further action. Mark Chambers (Environment, Food and Rural Affairs) felt that November 30 was hugely successful and the new scheme would not have been as good without it. If we resist the offer, the government might impose an inferior, punitive settlement, he said. or other negotiated gains. Dai Hudd said November 30 had resonated with Prospect members because the action brought all affected unions in the TUC together. However, several unions in other sectors were now moving towards a settlement. On contribution rates, it had to be recognised that at 5.6%, civil servants new contribution rate would be lower than health workers (9.8%), teachers (9.6%) and local government (over 8%). Summing up, sector president John Streeter said exercising leadership meant very reluctantly recommending a yes vote in the ballot, with sufficient caveats and full information. Rejection could result in a worse settlement, that members would live to regret. The sector executive did not believe members wanted sustained industrial action, the only real alternative. Noon outcome is in our hands

4 4 PUBLICEYE April 2012 TIMELINE / NEW SCHEME Pensions timeline Superannuation Act creates Principal Civil Service Pension Scheme, later known as Classic, with 1/80ths accrual rate plus pension lump sum OCTOBER 2002 Premium scheme introduced for new entrants with 1/60ths accrual rate JULY 2007 Nuvos career average scheme introduced for new entrants with 1/43rds accrual rate, and cap and share arrangements for all civil servants JUNE 2010 New government announces RPI-CPI switch, sets up Hutton Commission to look at affordability of public service pensions OCTOBER 2010 Hutton s interim report recommends higher member contributions to PCSPS NOVEMBER 2010 Chancellor announces intention to save 2.8bn on public service pensions from April 2012 and to raise contributions by 3.2% MARCH 2011 Final Hutton report recommends career average schemes for public servants, linking normal pension age to state pension age and a cap on employer contributions. Government accepts report. TUC-Cabinet Office talks begin APRIL 2011 CPI switch comes into effect JULY 2011 Danny Alexander announces average 1.2% rise in contributions from April 2012 plus further increases in totalling 3.2% SEPTEMBER 2011 Prospect announces ballot on industrial action against pension changes and imposed contribution increases. Other public service unions do the same OCTOBER 2011 First scheme-specific talks on the design of the new PCSPS held between unions and Cabinet Office NOVEMBER 2011 Government concedes protection for staff within 10 years of pension age and improves new scheme design. Prospect members vote 75%- 25% for industrial action. On November 30 they join public servants in 26 unions in biggest union protest for a generation DECEMBER 2011 High Court rules against union call for judicial review of CPI switch. Alexander puts Heads of Agreement to unions confirming proposals on higher contributions and pension age, and new career average scheme JANUARY 2012 Prospect notes Heads of Agreement. Negotiations with Cabinet Office, Treasury continue MARCH 2012 Final government offer includes faster accrual rate for new scheme, cap and floor on employer contributions and enhanced Fair Deal protection for staff transferred out of civil service. Prospect s sector executive reluctantly recommends acceptance at meeting of branch reps, calls ballot of members New scheme design: the sh of Nuvos 2015 Modelled on the existing Nuvos scheme, the main features of the government offer are Type of scheme Career average scheme for all service from 1 April 2015, except for individuals covered by transitional protection and the retention of any final salary link for accrued service. Accrual rate A rate of 2.32% (equivalent to 1/43.1) of pensionable earnings each year. This means pension will build up one third faster than in Premium and nearly double the rate in Classic. It is also an increase on the rate in the Heads of Agreement (2.28%) and in Nuvos (2.3%). There will be no limit to the amount of pension that can be accrued in the new scheme. Indexation Active members benefits, pensions in payment and deferred benefits to increase in line with prices, currently CPI. Normal Pension Age Will equate to state pension age for all post-2015 service. Link will be kept under review. Changes to SPA to be linked to changes in longevity. Commutation An option to exchange pension for additional pension lump sum, as in Nuvos. This will be at a rate of 12:1, as per current schemes. Spouses/partners Pension of three-eighths of member s pension for the surviving spouse/partner, as in Nuvos. Death in service Lump sum of two times salary, as in Nuvos. Ill-health benefits In line with Nuvos. Early/late retirement Actuarial decrease/increase for early/late retirement on a costneutral basis. Flexibilities The new scheme has a number of flexible options. Prospect was keen to develop these to reflect the individual choices many people want to make for their pension provision, and to give members greater control over when they choose to retire. These flexibilities include: Abatement Will not apply for post-2015 service in the new scheme for members who return to work after drawing pension. Abatement rules in all current PCSPS schemes will remain unchanged. Partial retirement Rules for service will follow the existing rules. Members with service in both the new and existing schemes will be able to APRIL 2012 Ballot of members gets under way Contribution rates AVERAGE member contributions of 5.6% to be in place from April 2015, tiered as set out below. Rates to be confirmed following a joint review by Cabinet Office and unions. Pensionable salary (full-time equivalent) Contribution rates (before tax relief) Net of tax Up to 21, % 3.68% 21,001-45, % 4.36% 45, , % 4.41% 150,000 and above 9.0% 4.5%

5 PUBLICEYE April NEW SCHEME JONATHAN EELES ape Fighting talk: Prospect s pension negotiators launch the campaign for the November 30 day of action after members vote 3 to 1 for strike action Transitional protection For members in existing PCSPS schemes and who from April 2012 are within 10 years or less of their current pension age: They will retain their full existing benefits in those schemes, including the Normal Pension Age appropriate to that scheme. For those in Classic or Premium who on 1 April 2012 are between age 46 and 6 months and age 50; or those in Nuvos between age 51 and 6 months and 55: These groups will have a choice to continue in the existing schemes on a tapered basis for up to 10 years from now or to join the new scheme. They will be able to take their original pension at their NPA, including accrual post After the protection ends they accrue pension in the new scheme. apply for partial retirement under each scheme, as at present. Flexibility Members will be able to take any pension they have accrued under their existing scheme and retire or continue to work and accrue pension in the new scheme at the same time. Additional contributions Members wishing to retire before their SPA can fund earlier retirement of up to three years without an actuarial reduction. Added years Existing arrangements will continue. Added pension Existing arrangements will continue. Scheme costs and sharing A cap and a floor will be set on the employer s contributions, to provide backstop protection to the taxpayer and to scheme members against unforeseen increases or falls in the costs of the scheme. The cap and floor will be set 2% above and below the value of the scheme that will be calculated in This floor will also allow for member benefits to be Government has not moved on contribution rates but the accrual rate, 10-year protection and terms of Fair Deal are improved improved if the value of the scheme falls below the floor. This is a positive development which represents the first opportunity in the civil service for members to benefit from future cost savings in the scheme. Only changes in member costs will affect the cap and floor, such as longevity, career paths, age and gender mix. The employer will meet changes in administration costs, the discount rate, actuarial methodology or overpayments by employers. The greater headroom in the operation of the cost cap will mean that contribution increases or benefit reductions are much less likely than under current risk-sharing arrangements. 25-year guarantee The government has guaranteed that the new scheme, if agreed, will remain in place for at least 25 years. It will seek to enshrine this pledge in legislation. Fair Deal The offer includes new arrangements for protecting the pensions of those who are subject to transfer from the civil service by outsourcing or privatisation. Previously, such changes required those affected to transfer out of the civil service pension scheme. The new arrangements will allow ex-civil servants to remain in the appropriate part of the PCSPS, both when they are transferred out under TUPE and for subsequent TUPE transfers. This represents a significant improvement to the current Fair Deal arrangements. 2013/14 contribution increases Cabinet Office and unions will examine contribution structures so that they: protect the low paid take account of the tax regime minimise the risk of opt-outs ensure the scheme remains sustainable, valuable and affordable to all members. Scheme governance The new scheme will be reviewed jointly with unions in the light of Hutton s recommendations for improved scheme governance. Questions and answers The complete brief is at

6 6 PUBLICEYE April 2012 CALCULATOR Have you worked out how your pension will be affected? THE new scheme will provide benefits that are calculated on a basis that is very different to the way Classic and Premium pensions are worked out, says Prospect pensions officer Neil Walsh. It is difficult to assess the value of the pension you will earn simply from a high level description of the main features such as type of scheme, pension age, accrual rate and other technical elements. Perhaps the best way to judge the scheme you are being Walsh check out the figures asked to vote on is to compare the expected level of pension in the new scheme to the expected level of pension from your current scheme. The examples provided here show figures for members with different combinations of age and length of service, and at different retirement ages. The examples rely heavily on underlying assumptions about factors such as earnings growth and even what state pension age will be. In the examples below the earnings growth assumption is 2.25% in excess of CPI inflation. This is in line with long-term actuarial analyses of civil service pensions, as used by the Cabinet Office. If actual earnings growth does not meet this assumption, relative outcomes under the new scheme would improve. This could be significant. Broadly speaking, people will get a lower pension at age 60 under the new proposals; but most people will have a higher pension at state pension age. Members will be able to access calculations more tailored to their own circumstances from a spreadsheet on Prospect s website at The examples show the ratio of all benefits under the new proposals (including protected pension from the previous scheme) compared to the pension that would have been accrued if the current scheme had continued until retirement. PREMIUM MEMBER, 45 YEARS OLD, 15 YEARS SERVICE ON 1 APRIL 2012 Age of retirement Ratio of benefits 95.4% 96.4% 97.6% 99.1% 100.9% 102.6% 104.8% 107.3% CLASSIC MEMBER, 45 YEARS OLD, 15 YEARS SERVICE ON 1 APRIL 2012 If the same member had been in Classic and decided to take a pension lump sum equivalent to the pension lump sum under Classic rules then the percentages would be: Age of retirement Ratio of benefits 97.2% 98.8% 100.4% 102.6% 105.1% 107.5% 110.6% 114.1% CLASSIC MEMBER, 40 YEARS OLD, 20 YEARS SERVICE ON 1 APRIL 2012 A member who joined at a young age could benefit from the removal of limits on service and pension. Age of retirement Ratio of benefits 94.2% 95.8% 97.3% 99.3% 101.6% 103.9% 109.6% 115.8% PREMIUM MEMBER, 35 YEARS OLD, 10 YEARS SERVICE ON 1 APRIL 2012 For a younger member with less service the impact of the new benefits is greater because they have less protected service, their pension age is higher and the impact of the switch to career average is greater. Age of retirement Ratio of benefits 86.8% 88.4% 89.9% 91.9% 94.1% 96.2% 98.8% 101.7% NUVOS MEMBER, 30 YEARS OLD, 4 YEARS SERVICE ON 1 APRIL 2012 The impact on Nuvos is less variable. The higher pension age reduces outcomes but this is partiallly offset by the better accrual rate. Age of retirement Ratio of benefits 89.0% 89.1% 89.7% 91.1% Prospect s pay and pensions forum in London gave 100 branch reps the chance to hear details of the government s offer and feed back members views DID the November 30 strike result in a better pensions offer, or not? Would members be willing to strike again, if after a ballot the latest deal was rejected? These were among the key questions debated by reps on March 16. Many reps came armed with views from their members. Peter Hale (MOD Air) said a snapshot of views in his section had only received responses from the over-50s mainly saying, accept, it s the best you are going to get. Nick Mole (Intellectual Property Office) believed the deal should be failed over CPI uprating and increased contributions, which were a blatant tax. Divorcing pensions from a pay campaign would not send the right message. Several delegates, including Simon Hester (Health and Safety Executive) wanted to know how much the new scheme would cost members overall compared to the first offer, which Prospect had warned would mean an average fall in value of 47%. Hester said his branch felt militant at the prospect of members having to work longer and pay more. Jerry Bromfield (Valuation Office Agency) said there were distinct advantages in the 2015 scheme compared to Nuvos, apart from the pension age change. He believed members should vote on the overall offer, not just how it affected them as individuals. John Bird (UK Hydrographic Office) had polled members before scheme details were revealed; 67% rejected a career average scheme, 82% opposed longer working and 80% favoured strike action. But he felt that would change after they saw the full offer. From the Planning Inspectorate Agency, Richard Tamplin pointed out that part-timers would have to pay the same PICTURES: STEFANO CAGNONI

7 PUBLICEYE April CPI VERDICT Appeal court deals a blow on pension rises PROSPECT has expressed dismay at last month s decision by the Court of Appeal to allow the government to use the Consumer Prices Index to calculate pension rises, upholding an earlier High Court ruling. Four unions and a retired members organisation, representing 1.1 million people, appealed jointly against the chancellor s decision to use CPI instead of the Retail Prices Index to uprate public sector pensions and state benefits. The case was conjoined with a similar appeal by seven other unions. The judges refused to grant the applicants permission to appeal to the Supreme Court, though they can ask the Supreme Court for permission. This ruling will mean smaller pension rises for millions of pensioners, said deputy general secretary Dai Hudd. We will consider the judgment carefully before deciding on our next step, but will continue pressing for a revision of CPI. Our concerns are shared by the Royal Statistical Society and others, and will be given further impetus by this decision. In the case, the unions argued that: CPI did not measure whether pensions had retained their value in relation to the general level of prices, as stated in the 1971 Pensions (Increase) Act. It assumes that if one category of product increases in price, consumers would switch to a cheaper one the government was driven by the fact that using CPI would result in a significantly lower increase in public sector pensions, thus reducing public spending. Members protest outside MOD Main Building in Whitehall on the November 30 day of action STEFANO CAGNONI But the three Appeal Court judges found that: CPI was a perfectly proper index, which measured what the 1971 Act required either RPI or CPI could be used to uprate public sector pensions, and the government, when choosing, could take into account the effect on the national economy if it was proportionate to do so. Furthermore, CPI was less volatile than RPI, used by the Bank of England, and an equivalent index was used in other countries. It was therefore a more appropriate index to use. The government s proposed 2015 pension scheme will be subject to new legislation, which would allow it to apply CPI irrespective of the outcome of any further appeal. The CPI switch was announced in the June 2010 Budget and imposed from April Over time it is up to 1.4% lower than RPI, according to the Office for Budget Responsibility. Hudd said: This decision will save government more than 6bn a year. Compounded over years of retirement, pensioners face average losses of 15-25% in the value of their pensions. Private sector schemes received authority to make the same change except where the scheme rules specifically state a link to RPI losing more than 70bn in benefits. See members circular: prospect.org.uk/id/2012/00429 Current employee contribution rates CONTRIBUTION rates for the Principal Civil Service Pension Scheme vary from 1.5% for members of Classic (closed to new members in 2002); 3.5% for Premium (for new entrants between 2002 and July 2007); and 3.5% for Nuvos (since July 2007). Proposed increases for and up to are shown in the table, see right. Current contribution levels across the public sector are shown below. CURRENT PUBLIC SECTOR CONTRIBUTION LEVELS Scheme Employee contribution % Employer contribution % % of total paid by employees Civil service 1.5/ Fire Local government NHS Police Teachers Source: Independent Public Service Pensions Commission PREMIUM/CLASSIC PLUS/NUVOS Full-time equivalent pensionable pay Actual rate Actual rate Increase net of tax Increase to Up to 15, % 3.5% 0.0% 0.0% 15,001 to 21, % 4.1% 0.48% 1.5% 21,001 to 30, % 4.7% 0.96% 3.0% 30,001 to 50, % 5.1% 1.28% (Basic) 0.96% (Higher) 4.0% 50,001 to 60, % 5.5% 1.2% 5.0% Over 60, % 5.9% 1.44% 6.0% CLASSIC Full-time equivalent pensionable pay Actual rate Actual rate 2012/13 Increase net of tax Increase to Up to 15, % 1.5% 0.0% 0.0% 15,001 to 21, % 2.1% 0.48% 1.5% 21,001 to 30, % 2.7% 0.96% 3.0% 30,001 to 50, % 3.1% 1.28% (Basic) 0.96% (Higher) 4.0% 50,001 to 60, % 3.5% 1.2% 5.0% Over 60, % 3.9% 1.44% 6.0% Note: Cumulative increases from 2012 to 2015 will average 3.2%. Exact increases in 2013 and 2014 subject to consultation.

8 8 PUBLICEYE April 2012 PAY CAMPAIGN n Using estimates for the rate of inflation over the next three years and for the 2014 pay settlement, gives the following figures: Real pay set to shrink 17% over five years RPI inflation % RPI inflation 3.0% pa (estimated) 9.0% Extra pension contributions (average) 3.2% Total reduction 21.8% Pay increases 1% pa 2.0% Pay increase 2014 (estimated) 3.0% Net pay reduction 16.8% *Pay freeze expires 2012 or 2013 according to earlier multi-year settlements. STEFANO CAGNONI PAY curbs and the hike in pension contributions will mean an average cut in real pay for specialists and other civil servants of about 17% over the five years , according to figures compiled by Prospect. Prospect is stepping up its campaign for fair pay for specialists, using evidence from a report by Incomes Data Services entitled Current issues in government public sector pay policy. The research was jointly commissioned with senior civil service union the FDA. According to the IDS analysis of the effect of increased pension contributions on gross pay: a person in an H-level role (at the max of their scale, paying 3.5% contributions) faces an extra 559 in contributions for ; and by will earn 856 less than today a person in an S-level role (at the minimum of their scale, 1.5% contributions) faces an extra 586 in contributions for ; and by will earn 944 less than today a grade 7 role (max of pay scale, 1.5% contributions) faces an extra 1,095 in contributions for ; and by will earn 1,795 less than today. The IDS research has been IAN COOPER Branch chair Peter Watson explains the pensions offer to members, above and top, at the Office for Nuclear Regulation and the Health and Safety Executive, Bootle circulated to branches and provides powerful ammunition for Prospect s civil service sector to campaign for an end to the government s pay discrimination against public servants. It disputes the alleged public sector pay lead over the private sector, pointing out that the public sector has a far higher number of qualified, skilled jobs than the private sector; and a lower number of unskilled, less qualified jobs. When like work is compared with like work the pay gap is reversed, so that, as the Office for National Statistics confirmed last month, degree-level workers are paid 4.1% less in the public sector. Prior to the recession, private sector earnings were higher than the public sector, says IDS. And since 2010 the private sector has resumed its pay lead, which it will maintain thanks to the continuing 1% ceiling on public sector pay increases. Still talking PROSPECT reps from the Local Government Pension Scheme met in March to hear an update from deputy general secretary Dai Hudd on how negotiations between the unions and government are faring. While a principles document on the scheme s future is under discussion, as PublicEye went to press, little progress In the case of the civil service, the picture is further skewed by the Treasury s device of including incremental progression in headline pay awards. This has the effect of making basic civil service pay rises lower than the majority of the whole economy, including the rest of the public sector. The IDS report also challenges the myths that private sector pay is set locally and that public sector pay rates distort or crowd out the private sector at local level, countering the chancellor s argument for introducing regional pay for public sector workers. Report summary from: prospect.org.uk/id/2012/00580 Check and update your details online LOG INTO Your name will be displayed in the login status box. Click the arrow to the right and select Edit your Details. Make your changes, scroll down the page then click Save Changes. If you need help, contact webmaster@ prospect.org.uk had been made on the details. About 5,000 Prospect members are in the LGPS from the recently merged Aspect group of education professionals, to the Environment Agency, Museum of London, Greenwich University and Menter Mon branches. LGPS members will be balloted separately from members in the civil service, once negotiations have concluded. PUBLISHED BY PROSPECT, APRIL PRINTED BY COLLEGE HILL PRESS