Equality Impact Assessment

Transcription

1 u Equality Impact Assessment (Annex B) Equality Impact Assessment Group: ERG Directorate / Unit: CS Workforce This template represents Annex B from the Equality Impact Assessment guidance October 2011

2 Equality Impact Assessment (Annex B) Preliminary screening Date of Screening November 2011 Name of Screener Matthew Kirke Director William Hague Name of Policy Employee contribution level of the Principal Civil Service Pension Scheme X This is new This is a change to an existing policy This is an existing policy, not previously assessed Aims, Objectives & Projected Outcomes The Government announced in the 2010 Spending Review that public service workers would be asked to pay more into their pensions following the interim findings of the Independent Public Service Pensions Commission. Accordingly the Spending Review included a target to produce savings of 2.8 billion (including the 1bn savings identified by the previous Government) across all public service pension schemes in the three years to The increase in member contributions will be phased over three years in order to allow reasonable time for members to adjust. The need for increased employee contributions is supported in the analysis contained within the report by the Independent Public Service Pensions Commission chaired by Lord Hutton. Lord Hutton was clear that in the past, the increased costs from improvements to longevity had been picked up by the taxpayer rather than by scheme members, and so there was a case for short term measures to correct this. This measure ensures that pensions across the public sector remain affordable in the short term and strikes a fairer balance between distributing costs between scheme members and the taxpayer. In July 2011 the Chief Secretary to the Treasury confirmed that there would be a need to increase civil servants contributions to their pension schemes from April 2012 as part of wider reform of public service pensions. On the 28 th July the Cabinet Office announced the proposals and launched a consultation process for the increases in contribution levels for the year 2012/13 for members of the Principal Civil Service Pension Scheme (PCSPS). This Equality Impact Assessment relates to the increase in contribution planned for only. Background The PCSPS is in three main sections - the 1972 section known as classic, the 2002 section known as premium and the 2007 section known as nuvos.

3 Equality Impact Assessment (Annex B) Classic and premium are final salary arrangements with a general pension age of 60, while nuvos provides benefits calculated on a career average basis and has a pension age of 65. In common with most other public service pension schemes, the PCSPS operates on an unfunded pay as you go basis. This means that pensions are paid from current revenues (with any shortfall met from the Exchequer). The pension promise is therefore met by the Government of the day rather than by reliance on a fund of assets The members contribution rates are set in the scheme rules. Premium and nuvos members generally pay contributions at a rate of 3.5% of pensionable earnings. Classic members generally make a 1.5% contribution of their pensionable earnings towards survivors benefits and they may receive a partial refund of those contributions if they are neither married nor in a civil partnership when they retire Aims and Objectives The Government s proposal to increase contributions is based on analysis set out in the consultation document and the clear rationale set out in the Independent Public Service Pensions commission s report, published in March The Government aims to rebalance the contributions made by employers and staff. Annual expenditure on public service pensions over the last decade has increased by a third, to 32 billion. The balance of these costs needs to be shared more fairly between employees and taxpayers. Employers of members of the Civil Service pension scheme currently make pension contributions averaging just under 19% of pay, while most scheme members current contribute either 1.5% or 3.5% of pay, depending on their scheme. Outcome To deliver these savings the Civil Service pension scheme, like other public service pension schemes, should deliver savings equivalent to an average increase of 3.2 percentage points in employee contributions by The Government recognised that these increases would be unwelcome, and therefore it announced that the increases would be phased in over the three years period starting from April This means that the increase from April 2012 will amount to an equivalent of 1.28% of pay. It has been proposed that the extra contributions will be tiered. This reflects the Government s wish to ensure that, at a time of fiscal consolidation and public sector restraint generally, it is fairest to ask those with the highest salaries to pay more, to help protect the lowest paid. Furthermore, it is the Government s aim that the increased contributions should be balanced against a desire to minimise any scheme members opting out of the scheme.

4 Equality Impact Assessment (Annex B) The table below outlines the bandings put forward in the Government s consultation. Pensionable earnings (Full-time equivalent annual rate) Proposed increase Gross % of pay Proposed increase net of tax relief Under 15,000 0% 0% 15, % 0.48% 21,000 21, % 0.96% 30,000 30, % 1.28%/0.96%* 50,000 50, % 1.20% 60,000 Over 60, % 1.44% *Additional contribution rates shown for basic rate and higher rate taxpayers Will the policy have an impact on national or local people/staff? Are particular communities or groups likely to have different needs, experiences and/or attitudes in relation to the policy Are there any aspects of the policy that could contribute to equality or inequality? Could the aims of the policy be in conflict with equal opportunity, elimination of discrimination, promotion of good relations? If this is an amendment of an existing policy, was the original policy impact assessed? YES NO NO NO N/A If YES, to any of these questions go on to the full EIA. If NO to any particular questions, please provide explanatory evidence.

5 Full Impact Assessment Date of Assessment 25 November 2011 Name of Assessor Matthew Kirke STATISTICS & RESEARCH What relevant quantitative & qualitative data do you have in relation to this policy? Please site any quantitative (eg, statistical research) and qualitative evidence (monitoring data, complaints, satisfaction surveys, focus groups, questionnaires, meetings, research interviews etc) of communities or groups having different needs, experiences or attitudes in relation to this item of work. Equality Target Areas How does the data identify potential or known positive impacts? How does the data identify any potential or known adverse impacts? The main source of quantitative data used in support of testing the equality impact of the proposals is the Annual Civil Service Employment Survey (ACSES) database. The most up to date data in the database includes all home civil servants in post on 31 March The data do not include employees of the Northern Ireland Civil Service, employees in the wider public sector, or Civil Servants on secondment to non-civil Service organisations. 1 The information is collected by ONS from Government Departments, who are employers for the purpose of the Civil Service scheme. The ONS compile an Annual Civil Service Statistics publication that produces summary statistics based on the ACSES data. Some of the statistics in this document were taken from this document directly, and some were based on further analysis that was done of the underlying data. There is information in the data on a range of factors including the age, gender, ethnicity, disability status and earnings and location of the Civil Service workforce, which allows for splits and breakdowns of these groups. The data does not, however, include any information on religion, transgender or sexual orientation. Race (consider e.g. nationalities, Civil Service Statistics 2011 show that of those who declared their ethnicity there are 359,740 white Civil Servants and 36,630 (around 9% of the total) who are members of an ethnic minority. 1 The civil service statistics do not include civil service pension scheme members who are employed by a schedule 1 employer (as set out in the Superannuation Act 1972). 5

6 languages) There have not been any specific impacts identified for this target group. The chart below shows how this breaks down across different responsibility levels and shows that there is a greater proportion of staff from a minority ethnic background at more junior levels. Junior levels will be protected from the increases, relative to more senior levels, by the progressive nature of the proposed increases. Chart: Proportion of staff from minority ethnic backgrounds at different responsibility levels Disability (consider social access and physical access) Source: ONS Civil Service Statistics % of all Civil Servants have declared that they have a disability. The proportion is higher in the lowest grades (8.6% in the AO and AA grades) and slightly lower in the highest grades (5% of senior Civil Servants and grades 6 and 7). Chart: Proportion of staff with declared disability at different responsibility levels Source: ONS Civil Service Statistics 2011

7 There have not been any specific impacts identified for this diversity group. Gender The chart shows how this breaks down across different responsibility levels and shows that there is a greater proportion of staff with a declared disability at more junior levels. Junior levels will be protected from the increases, relative to more senior levels, by the progressive nature of the proposed increases. There are 498,433 Civil Servants. Full Time staff account for 78% of the workforce (388,318). 56% of full timers are men, and 44% are women. Part Time staff account for 22% of the workforce (110,115). 16% of part timers are men, and 84% are women. The chart below shows how staff break down by responsibility level overall, and then what proportion of each responsibility level is made up by female staff. Chart: distribution of staff by responsibility level Source: ONS Civil Service Statistics 2011

8 Chart: proportion of female staff within each responsibility level Source: ONS Civil Service Statistics 2011 The Government s approach is to structure contribution levels so they are based on full time equivalent salary. Some respondents to the Government s consultation suggested that part-time workers could be disproportionately impacted by the change (see section below for further details). The chart below shows the gender breakdown of male and female part-time workers at different ages. This shows the number of part-time female staff rising fairly steadily with age up to their mid-40s and then reducing again. It is notable that for men the increase in part-time working happens later on in their career as they approach retirement. Chart: Male and female part-time staff by age Source: Internal analysis of ACSES data

9 Chart: Part-time / Full-time split by gender and age Gender Identity Source: Internal analysis of ACSES data There have not been any specific impacts identified for this diversity group. Religion or Belief There have not been any specific impacts identified for this diversity group. Sexual Orientation There have not been any specific impacts identified for this diversity group. Age The chart below shows the distribution of the civil service workforce by age, and salary. This shows a slight correlation between age and salary, though within every age band most staff earn either the lowest or second lowest salary band (under 20,000 or 20,000 to 30,000).

10

11 What research have you considered commissioning to fill any data gaps? For example, you may need to ensure quantitative & qualitative data groups include stakeholders with respect to this policy. Note: Include any recommendations in your action plan A consultation process was launched on 28 th July 2011 and closed on the 20 th October The commencement of the consultation process was communicated to staff in Civil Service departments via Permanent Secretaries. All employers were asked to pass the consultation document onto all Trade Unions or staff organisations they were aware of. Copies were also sent to all Civil Service Trade Unions of whom Cabinet Office were aware. A separate inbox was set up for the views of respondents. Views on the could be submitted through the Civil Service website or via the post. Staff workshops were also held by Departments to highlight the proposals and the consultation. Who are the stakeholders, community groups, staff or customers for this policy area? All staff Trade Unions The National Trade Union Committee who represented the views of the Civil Servants across the Civil Service Departments Staff associations Payroll providers What are the overall trends and patterns in this qualitative & quantitative data? Disproportionality; regional variations; different levels of access, experiences or needs; combined impacts. The overall trends in the quantitative data collected by the ONS ACSES are outlined above. The consultation process received over 3,400 individual qualitative responses. These responses were analysed and sorted by broad theme so that any potential disproportional impacts highlighted by respondents were recorded. were analysed and any potential disproportional impacts documented. Through this analysis these key trends emerged. Full Time vs Part Timers Some respondents felt that setting the proposed contribution increases using FTE salary was unfair, particularly to part-time staff. It was felt that this would penalise staff who would pay a higher rate than their actual salary would

12 justify. Social engineering A number of respondents were opposed to the changes on ideological grounds. For example, one higher-earning respondent stated that it was unfair that they had to pay a disproportionate amount to subsidise the pension contributions of the lower paid. Unable to afford rise Many respondents feel that they simply are unable to afford the rise and will have to stop paying contributions into their pensions. Please list the specific equality issues that may need to be addressed through consultation (and further research)? There are no equality issues identified that it is planned to address prior to the implementation of the April 2012 increases. The Government will consult with Trade Unions further over the further increases proposed to take place in April 2013 and April 2014.

13 Gathering evidence through community engagement Internal stakeholder engagement: Consulting & involving Other Government Departments, Staff, Agencies and NDPBs Does this policy affect the experiences of staff? How? What are their concerns? Staff Able to submit views through the Civil Service website or through the post Staff networks Able This to submit views through the Civil Service website or and associations through the post Trade Unions Able to submit views through the Civil Service website or through the post How have you consulted, engaged and involved internal stakeholders in considering the impact of this proposal on other policies and services? A consultation process was launched on 28 th July 2011 and closed on the 20 th October The commencement of the consultation process was communicated to staff in Civil Service departments via Permanent Secretaries. All employers were asked to pass the consultation document onto all Trade Unions or staff organisations they were aware of. Copies were also sent to all Civil Service Trade Unions of whom Cabinet Office were aware. A separate inbox was set up for the views of respondents. Views on the could be submitted through the Civil Service website or via the post. Staff workshops were also held by Departments to highlight the proposals and the consultation. What positive and adverse impacts were identified by your internal consultees? Did they provide any examples? (The section below is a repeat of the one above) The consultation process received over 3,400 individual qualitative responses. These responses were analysed and sorted by broad theme so that any potential disproportional impacts highlighted by respondents were recorded. were analysed and any potential disproportional impacts documented. Through this analysis these key trends emerged. Full Time vs Part Timers Some respondents felt that setting the proposed contribution increases using FTE salary was unfair, particularly to part-time staff. It was felt that this would penalise staff who would pay a higher rate than their actual salary would

14 justify. Social engineering A number of respondents were opposed to the changes on ideological grounds. For example, one higher-earning respondent stated that it was unfair that they had to pay a disproportionate amount to subsidise the pension contributions of the lower paid. Unable to afford rise Many respondents feel that they simply are unable to afford the rise and will have to stop paying contributions into their pensions. Feedback the results of this internal consultation and use it as a basis for work on external consultation

15 External consultation and involvement How did your engagement exercise highlight positive and negative impacts on different groups / communities? Voluntary Organisations Race Faith Disability Rights Gender Gender Identity Sexual Orientation Age n/a internal Civil Service policy change n/a internal Civil Service policy change n/a internal Civil Service policy change n/a internal Civil Service policy change n/a internal Civil Service policy change n/a internal Civil Service policy change n/a internal Civil Service policy change n/a internal Civil Service policy change Feedback the results of your engagement (ie, involvement and consultation) to all participants including internal and external stakeholders

16 Assessment and analysis Does the EIA show a potential for differential impact on any group(s) if this proposal is introduced? If Yes, state briefly whether impact is adverse or positive and in what equality areas. The Government s proposal to tier contributions will have a greater impact on the take-home pay of higher paid staff than lower paid staff. It is felt that this differential impact is justified on three grounds. Firstly, Lord Hutton s report presented clear analysis that showed that Final Salary pension arrangements disproportionately benefit high flying staff who experience faster salary growth than those with more modest growth. Tiering contribution increases mitigates this disproportionate benefit that already exists, and is therefore positive in equality terms. Secondly, the Government believes that during a time of public sector restraint, those staff with the highest salaries should bear more of a burden than the lowest paid employees of the public sector. Thirdly, the Government has an objective to minimise scheme opt-outs. Evidence from the scheme database shows that lower paid staff are proportionately more likely to opt out than higher paid staff. Source: Penserver database and ACSES Therefore it is legitimate and proportionate to tier contributions such that there is a differential impact on different salary tiers. It is recognised that for higher paid staff in the career average nuvos scheme, some of the points directly to final salary provision does not apply. However, the point about taking on a bigger share of the burden remains, so as to encourage lower paid staff to participate in the pension scheme from the start of their career.

17 Concern was raised by respondents that part-time workers could be disproportionately affected by the proposal to set contribution tiers based on Full-time Equivalent salary rather than actual salary, and given that 84% of part-time staff are women, this approach could have a greater impact on women than men. Careful consideration was given to this, including seeking legal advice on the implications of basing contributions on FTE salary or on actual salary. Basing contributions on FTE salary ensures that the same level of contribution is paid for staff earning the same amount per hour. If rates were set based on actual salary it would disproportionately penalise full-time staff who would pay more for their pension, per hour worked, than part-time staff. The table below illustrates this difference (assuming that the contribution tiers remained constant): Name Scheme FTE Salary Actual Salary Hourly rate Hourly contribution if based on FTE Hourly contribution if based on actual Value of Pension accrued each hour Adam premium 25,000 15, p 45.4p 21.7p Beverly premium 25,000 25, p 61.1p 21.7p It can therefore be seen that using FTE means that both members pay the same contribution for the same level of pension accrued. Using actual salary would mean that full time staff would face higher charges for the same pension. Furthermore, if rates were set based on actual salary it would require a greater cross-subsidy from higher paid and full time staff to ensure the average level of contributions is raised. It was noted, from the statistics above, that whilst a greater proportion of part-time staff are women, there are still nearly twice as many full-time female staff than part-time female staff. There is also no evidence that suggests that part-time workers will never return to full-time work during their career. On balance therefore it was felt that setting contribution levels according to full-time salary was a reasonable and proportionate approach to take. What were the main findings of the engagement exercise and what weight should they carry? The consultation response document outlines a range of views from the consultation exercise. The majority of respondents felt that additional contributions were unfair and they did not want to pay them. Other concerns include part timers, social engineering and ability to afford the rise. A full copy is located on the Civil Service website

18 consultation Does this policy have the potential to cause unlawful direct or indirect discrimination? Does this policy have the potential to exclude certain group of people from obtaining services, or limit their participation in any aspect of public life? We do not believe that there is the potential for unlawful direct or indirect discrimination. The policy is designed to rebalance the contributions made by public sectors workers and other workers. This will ensure that Civil Service pensions remain affordable whilst minimising opt outs and protecting the low paid. This is sufficient objective justification for any differential impact. The policy is a proportionate means of achieving a legitimate aim. How does the policy promote equality of opportunity and promote good relations? The policy is designed in such a way to minimise scheme opt outs and therefore ensure that all staff continue to have access to good quality pension provision This policy is designed so that those who are best able to afford the increase will bear the most. How can the policy be revised or additional measures taken, in order for the policy to achieve its aims without risking any adverse impact? No further changes to the policy are necessary or appropriate. Are there any concerns from data gathering, consultation and analysis that have not been taken on board? Please justify and explain the reason for your decision. There are no other concerns.

19 Ensuring access to information How can you ensure that information used for this EIA is readily available in the future? (Note: You will need to include this in your action plan) The statistics used are from the Civil Service Workforce 2011 ONS figures. These can be accessed - The consultation documentation is available on the Civil Service website. The Hutton report is available on the Treasury website. Individual consultation responses will not be made publically available, but will continue to be used to shape any further contribution increases over the next 3 years. This EIA will be publically available How will you ensure your stakeholders continue to be involved/ engaged in shaping the development/ delivery of this policy? (Note: You will need to include this in your action plan) We will continue to engage with national trades unions as required. How will you monitor this policy to ensure that the policy delivers the equality commitments required? (Note: You will need to include this in your action plan) The numbers of those who choose to opt out of Civil Service pension schemes will be monitored. This material is available publicly in the annual accounts. Now submit your EIA and related evidence for clearance. Ensure that the EIA is published on the Cabinet Office website before your policy is implemented. Director approval: William Hague Date:

20 Action plan Recommendations Responsibility Actions required Consultation Exercise Launch Consultation Exercise Response Monitoring & Review Arrangements Cabinet Office Cabinet Office Cabinet Office Publish Consultation Publish Response Membership levels monitored Success Indicators Numbers of those who responded Published on Internet Number of opt outs stay low Target Date Closed Oct 20 th 2011 Published by w/c 12 th Dec Ongoing basis What progress has been made? Successful Consultation Exercise Published Task logged Please ensure that the action plan is agreed by your Director.