|UCU SECOND SUBMISSION TO THE INDEPENDENT PUBLIC SERVICE PENSIONS COMMISSION.
The University and College Union (UCU represents 120,000 academic and academic related staff in universities, general and specialist further education colleges, and post 92 Universities and adult and prison education.
Its members are mainly members of public service pension schemes or public sector pension schemes. Within the scope of this commission its members are in the:
Teachers’ Pension Scheme (England and Wales)
Scottish Teachers’ Superannuation Scheme
Northern Ireland Teachers’ Superannuation Scheme
Medical Research Pension Schemes (funded)
NHS Pension Scheme
NHS Superannuation Scheme (Scotland)
Health and Personal Social Services Northern Ireland Superannuation Scheme
Within the Teachers’ Pension Scheme approximately 15% of the membership is in the post school world.
UCU fully supports the submissions submitted by the TUC, the Teachers’ side of the Teachers Superannuation Working Party (TSWP) and the Public Service Pensioners’ Council (PSPC), but wishes to stress issues particular to the experience of its members.
UCU wishes to make the following points
It is increasingly clear that the work of the Commission is not being left to undertake its work and report independently to government. Shortly after the committee was established the government announced its intention to move the indexation of public sector pension schemes from RPI to CPI. According to your interim report this reduced the value of public service pension benefits by 15%, and yet the report did not take account of this. Following the publication of the interim report the government in the spending review announced its intention to ‘implement progressive changes to the level of employee contributions that lead to an additional saving of £1.8 billion a year by 2014-15, equivalent to three percentage points on average to be phased in from April 2010.’ Whilst the commission did not recommend either of these two actions, failure to comment on the timing and method of the governments action, which appear to be one of imposition will be taken to be one of agreement.
The interference into the commissions work appear to make the task harder in ensuring that public service pensions are available for the low pay workers in the sector. Levels of employee contribution increases of the order of 3% more in Teachers Pension Schemes will simply make the low paid lecturer opt out of the scheme, reversing the positive aspect of automatic enrolment. Increases of this order will also not be affordable for new entrants into the profession who face the repayment of increased university fees, and cost of moving into the housing market. This will reduce the number of members and the provision of saving for retirement among the lower earners and younger members who will not get into the routine of saving for the future due to the present economic situation. The Commission will be aware that with the introduction of automatic membership in January 2007, at least 100,000 extra members came into the scheme. These were largely the hourly paid of the Further, Adult and Higher Education world. Lecturers who until 1995 were not eligible to be members of the Teachers Pension Scheme and who for a short period have been placed in a position of being able to afford to save for their pension.
UCU members are different from the school world, as many join the education world later in life after working in other areas of society and as a result have shorter service accumulation. In the post school world a lot of the service is reliant on hourly paid work which again reduces the member service accumulation. Therefore the government announcement to move from RPI to CPI with its corresponding reduction of the value of pension in payments, will particularly impact those with lower pensions, and the erosion will bring them into the income support area. This will act as a disincentive to save for retirement.
UCU was disappointed that the commission did not support the cap and share arrangements that have been put in place to support the public service pension schemes managing increases in cost of the individual scheme. These provide the framework for there to be a negotiated way for considering the extent of any contribution increases and change to benefits. UCU calls on the commission to support this route and encourage the government to avoid imposition and enable scheme specific discussion to take place.
UCU was also disappointed that the commission did not appreciate the degree of savings already coming through to the government and the taxpayer via the recent changes. ‘The Impact of the 2007-8 changes to public service pensions (National Audit Office, 2010), estimates that the changes will reduce by 14 per cent in 2059-60 compared to the pre-reform position.
UCU hopes that the commission will support ways in which staff affected by the contracting out of work from the public sector will be able to retain membership of their pension scheme as well as newly appointed staff to this work. Prison education staff, for example, depending on the winner of the contract, are frequently moved in and out of the Teachers Pension Scheme.
This situation could be avoided if TPS was given an ‘admit status’ facility as in the Local Government Pension Scheme. This would appear to be the most sensible route for government which is encouraging mobility and flexibility of services. Private employers would then be contributing toward the cost of providing public sector pension which would have the advantage of maintaining higher active members contributions as well as replacing the public spending on contributions.