Pensions Latest December 2011
On 16 December 2011, the Coalition Government announced that it will proceed with the increase in pension contributions for teachers from April 2012. This will affect all teachers in the Teachers' Pension Scheme (TPS) in England and Wales and is likely to be adopted in Scotland and Northern Ireland.
This announcement has been made despite the fact that the national discussions on changes to the pension schemes are still in progress and not due to conclude until the end of the year.
The increase in contributions is not being made because there are problems with the teachers' pension schemes but to raise money for the Treasury. This raise in contributions is a tax on teachers and other public service workers.
The Coalition has now imposed on teachers the following increase in contributions:
| Salary Band | Salary Band | Contribution rate in 2012-13 | Increase (against 6.4%) |
| 14,999 | 6.4% | 0% | |
| 15,000 | 25,999 | 7.0% | 0.6% |
| 26,000 | 31,999 | 7.3% | 0.9% |
| 32,000 | 39,999 | 7.6% | 1.2% |
| 40,000 | 74,999 | 8.0% | 1.6% |
| 75,000 | 111,999 | 8.4% | 2.0% |
| 112,000 | 8.8% | 2.4% |
The Coalition proposes further contribution increases in the next two years.
The announcement on contributions is yet another illustration of the extreme difficulties the NASUWT and other public service unions have faced in seeking to negotiate and work constructively with this government.
On Tuesday 20 December, the last day that Parliament is in session before the Christmas recess, the Coalition plans to make a further announcement on public sector pensions, including teachers' pensions. It is expected that the statement will summarise the outcome of the discussions held with the TUC and unions in the various sectors about changes to existing pension schemes. These discussions are still ongoing and the NASUWT will send further information next week to members when the final position is known.
As you are aware, the NASUWT has conducted a vigorous campaign to defend teachers' pensions. Our national ballot for industrial action conducted this term has pensions as a key part of the trade dispute with the Coalition Government.
Over the last 18 months the NASUWT has regularly conducted opinion surveys of members and we have acted on the thousands of responses received, which have always overwhelmingly demonstrated members' anger and frustration about the actions of the Coalition, supported our continuing efforts to seek a negotiated outcome and stated a clear willingness to take industrial action at the appropriate time.
The NASUWT has sought to engage with the Coalition over months of national discussions. However, despite our best efforts and the work of the TUC, little progress was made.
Consequently, there was widespread support from NASUWT members for the TUC Pensions Justice Day of Action, involving all public service workers, across the UK on 30 November. Congratulations to all those involved.
Predictably, around the day of action, there was a great deal of confusing media reporting on whether negotiations on pensions were taking place, whether 'deals' were about to be struck and about exactly what was on 'offer' from the Coalition Government.
Negotiations or Discussions?
There are two key forums for discussion with the Coalition Government on its pensions proposals:
- the central discussions, which involve ministers from the Cabinet Office and the Treasury and a TUC-led team of union negotiators;
sector scheme discussions for each of the separate pension schemes across public services. The TPS discussions involve the teacher unions, the employers, Department for Education (DfE) officials and, from time to time, ministers.
- The central discussions have been taking place over the last nine months. Members have received regular updates on these discussions and were advised that negotiations and progress were being severely handicapped by the fact that the Treasury consistently failed to provide key data and information necessary to support constructive negotiations.
The last meeting of the central discussions took place on 2 November 2011. At that meeting, the Chief Secretary to the Treasury, Danny Alexander, advised that he would be making a statement to Parliament that day, putting forward revised proposals for a 'Reference Scheme' (revised 'offer') that would apply to all public service pension schemes.
The Government's revised Reference Scheme included proposals for: a transitional protection arrangement for existing scheme members within ten years of retirement at 1 April 2012; a 1/60th accrual rate for the purpose of calculating pension benefits; the Normal Pension Age (NPA) to be linked to the State Pension Age (SPA); and a move from a final salary to a career-average defined benefit scheme.
The Chief Secretary's statement, the TUC's response and the NASUWT's comments were put onto the NASUWT website and can be found at www.nasuwt.org.uk/IndustrialAction. No further meetings of the central discussions have taken place despite requests from the TUC.
Sector Scheme Discussions - the Teachers' Pension Schemes
Since the beginning of this academic year, regular meetings have taken place. All unions agreed that the basis on which they would enter the discussions was on a without-prejudice basis to engage in exploratory discussions and not to support or facilitate the implementation of the Coalition Government's proposals.
The purpose of these discussions has been to explore in detail the implications arising from applying the Government's revised Reference Scheme to the TPS.
In the period leading up to 30 November, there was an intensive programme of meetings, all focused on examining the implications of the Government's revised Reference Scheme for teachers and exploring areas for possible further flexibility within the Government's revised Reference Scheme, the link between the teachers' pension age and the SPA, teacher longevity, pension accrual, revaluation and indexation factors, and contribution rates. However, there were no specific proposals on the table for changes to the TPS.
Key Points for the NASUWT
The DfE put union representatives under considerable pressure to put their proposals for change forward. A joint statement of principles was submitted but largely ignored by the DfE.
The NASUWT is seeking to represent the interests of all members in the discussions.
The Coalition's proposals for pension changes have a different impact on different groups of members, depending on when they started teaching, whether they are in the pre-2007 or post-2007 pension schemes, and future career paths.
The major sticking points for the NASUWT that remain unresolved are:
- the absence of a scheme valuation to enable assessment of the scale of the problem with the TPS or indeed to identify whether there is any problem at all;
- the Government's proposal to increase the Normal Pension Age for teachers to be in line with the State Pension Age;
- the Government's cost ceiling for discussions within the scheme, which is, in the opinion of the NASUWT, far too low to provide necessary flexibility to protect the interests of teachers;
- the imposed increase to employee contributions;
- the date of application of any transitional protection arrangements for existing scheme members.
These are concerns common across the schemes and the NASUWT has always maintained that these can only be resolved in the central discussions.
Without any negotiation or consultation, the Coalition Government changed the indexing of pensions from the Retail Prices Index (RPI) to the Consumer Prices Index (CPI), which immediately reduced the value of the pensions of serving teachers and of those who have already retired. The NASUWT challenged this change in the High Court. At the end of November, on a split decision of the presiding judges, the High Court ruled against the claim. The NASUWT is now taking the case to the Appeal Court as the Union believes that no stone should be left unturned in seeking to challenge the injustice and unfairness of the Government's actions.
Prevarication, Delay and Game Playing
The discussions have been inhibited from making real progress due to the Government's prevarication, delay in providing key information and game playing.
When the central talks were established over nine months ago, at a very early stage the TUC asked for details of any transitional protection that might be available and improvement in the pension accrual rate. No information was forthcoming.
Only when the NASUWT and other major public service workers announced their intention to ballot for action on 30 November was an 'offer' regarding transition and accrual rates put on the table by the Coalition. This was made on 2 November, leaving barely two months to conduct the detailed work necessary before the Coalition's imposed deadline of concluding the talks by the end of December.
From the outset, the TUC pressed for details of how calculations were being made to establish the basis for modelling of the impact of the proposals on individual teachers and other public service workers. Only recently has this been provided.
In the last few weeks, the Government has confirmed its intention to make further announcements on reforms to public sector pension schemes before Parliament rises, on Tuesday 20 December. The timing of this announcement has not been discussed with the trade unions. As the imposed deadline for completion draws near, a deadline that is completely unnecessary given that scheme changes will not take effect until 2015, the Coalition has continued to impose further changes which will materially affect the outcome of these discussions, including the arbitrary decisions to take off the table the option of a final salary scheme for teachers and the decision to remove flexibility in relation to linking the NPA to the SPA.
This raises serious questions about the Coalition Government's commitment to genuine negotiations.
Throughout the whole process the NASUWT has been committed to damage limitation and to preventing the imposition of a worst-case scenario for teachers.
The NASUWT and other unions are now in the final days of this sorry saga. The NASUWT will continue to fight vigorously to protect the interests of members and the profession.
