UNISON members in Scotland are beginning to receive ballot papers asking them to vote for industrial action to protect their pensions. The ballot closes on 3 November 2011.
As the lead negotiator for pensions in Scotland I have been closely involved in this issue and have met many members in meetings across Scotland. Pensions can be a complicated but the key issues are relatively straightforward. The issue is made more complex in Scotland because we have separate pension schemes that are regulated by Scottish Ministers. Primary pensions legislation is reserved to UK Ministers.
Firstly, UK ministers want to increase pension contributions by 3.2% of pay on average. That's nearly a 50% increase. Scottish Ministers are passing this increase on to NHS staff because their budget will be docked if they don't. They could have used the additional efficiency savings delivered by staff to pay for this, but decided not to. They are not increasing contributions for those staff covered by the local government scheme (LGPS) because their budget is not affected by the changes in England.
The most important point to understand is that not one penny of the money raised goes into pension schemes. It is simply a cash grab by the Treasury. The NHS schemes across the UK are £2bn in surplus each year and the Scottish LGPS funds are very healthy. UK Ministers keep saying that people are living longer so we need to pay more. Yes we are, although not as long in Scotland, which sadly is one of the reasons our funds are in better shape. But longevity is covered by agreements reached as recently as 1998 and 1999 in Scotland that allow for contributions to rise to cover real cost increases like this.
Secondly, we have recommendations from Lord Hutton that will mean staff working longer for less pension. Now some staff want to work longer and others have little choice because their retirement income in insufficient. £4,000 p.a. is the average local government pension. However, a blanket retirement age does not reflect the wide range of jobs covered by these pension schemes. A normal public service career was 40 years. Now that will eventually be going up to 50 years, and probably longer. Just think of the range of public service staff you engage with and reflect if 68 is reasonable for all of them.
Like much of Lord Hutton's report it is not the recommendations that are wrong but rather UK Ministers adding to them. He recommended a move from final salary to career average schemes. Now you can make a case for career average schemes, but UK ministers are using this as an opportunity to cut the value of pensions. Almost all the options they have tabled involve accrual rates that would result in smaller pensions on retirement.
It is the case that Scottish Ministers have not taken a position on the Hutton recommendations and the UK add ons. We have asked for assurances on these points, but have not received them as yet. However, we have seen a letter from the Treasury to Scottish Ministers on this point. That letter strongly implies that UK Ministers are planning to use their reserved powers to impose changes on Scotland.
Thirdly, UK Ministers have imposed cuts in all Scottish pension schemes by changing the indexing of pensions from the RPI to the CPI. This will result in an average 15% cut in retirement pensions. You pay into a scheme all your life only to see it cut when you come to claim it. If this was a private company you could sue for breach of contract.
So these are the three main reasons for the current dispute. For our members in the NHS the issues are immediate and clear - pay more, work longer, get less. For LGPS members the issues are longer term. But of course pensions are a long term investment and this ballot is about protecting those long term benefits.
Public service workers in Scotland are suffering from a pay freeze, attacks on terms and conditions, cuts in services and jobs. Our members understand that this attack on their pensions is the final straw. Enough is enough.
I have been a trade union negotiator for more than thirty years. You have to make judgements about when the people you are negotiating with are serious about reaching agreement. UK ministers are clearly in the business of taking money from our members and handing back an even poorer pension in return.
We will of course use every avenue to reach a negotiated agreement. But now is the time to support those negotiations with a big YES vote in this ballot.