Pensions Latest

NEWSLETTER 47 11 DECEMBER 2006

ONE WEEK TO CHANGE THOSE REGULATIONS! PLUS…INFORMATION ON GOVERNANCE AND DISCRETIONARY PAYMENTS


LAST DAYS TO CHANGE THE REGULATIONS – KEEP UP THE PRESSURE

Well done to those of you who have already contacted your MP’s – We know that the message is getting through - with responses from Boris Johnson to Jack Straw! But with one week to go before the draft Regulations appear, we have to continue to lobby hard. If you haven’t yet contacted your MP, please try and speak to him/her before Thursday when we expect the draft Regulations to be laid.

We must use these last days to persuade Phil Woolas to resolve this dispute.

So please make an appointment now to visit your MP in his/her constituency office or surgery

As a reminder - we need your MP to……

Persuade Phil Woolas to use his powers to amend his proposals for the ‘new look’ LGPS. It is within his power as LGPS Regulator to resolve this dispute.

Tell him/her that UNISON – and other trade union members – are entitled to a fair deal and equal treatment with other public sector pension scheme members.

This means …..

Better protection for existing members - with Scotland getting protection to 2020 and Northern Ireland set to go further, there is clearly no legal barrier to extending protection

A fair ill health retirement scheme – with numbers of ill health retirements dropping rapidly, there is no justification for hitting the most vulnerable members of staff in this way

Improved benefits - such as the 1/60 accumulation rate for existing protected members as well as new ones – no two tier system

No increase in the employee contribution rate to pay for a worse scheme, with lower employer contributions. ( The current proposals are for an average increase of 0.3% for employees and a drop of 0.3% for employers)

Better early retirement reduction factors – the current factors are far too punitive compared to other schemes

Remember: The cost of this is well within the 50% of savings from the deletion of the 85 year rule and the 25% commutation rate, combined with savings employers will start to make now from new employees joining a scheme without the 85 Rule and with the 25% lump sum commutation provision. Council Tax will not need to go up and the employers will save year on year as new members join.

Redundancy – LGPS Regulations

The Regulations replacing the Local Government Discretionary Payments Regulations (DPR) have now been laid. The DCLG has not heeded our legal arguments and has removed the power of employers to award up to ten added years. Under the new Regulations, the ceiling on lump sum payments on redundancy has increased from 66 to 104 weeks if compensation is paid under the DPR. The DCLG draws attention to the fact that employers can still award up to 6 2/3 added years under Regulation 52 of the LGPS. Our legal advice is that it is perfectly legal for authorities to continue to award added years under this Regulation to those made redundant.

The DCLG has agreed to improve the transitional protection so that added years are still allowed under the DPR for those who leave on or before the 1 April 2007. The power to award up to 104 weeks has been backdated to 1 October 2006.

The intention of these changes is not to cut costs. The DCLG explanatory memorandum to the new regulations states that there is ‘no reason to suppose that that implementation would lead employers to change their overall compensation budgets’.

A monitoring group has been set up by the DCLG to see what further changes should be made. UNISON has pointed out that many authorities are already using the change in the Regulations as an excuse to worsen their policies on compensating redundancy.

Department of Work and Pensions amendment to the Age Regulations

Many employers will try to use the Age Regulations as an excuse not to award added years altogether. However, the Department of Work and Pensions has just laid the amendments that UNISON pushed for. (Their intention is to exempt those made redundant from the Age Regulations.) The full text of the amendment is below

Our legal advice is that the amendments should allow employers to continue to award added years. This means the employer should no longer be able to hide behind the Age Regulations if they want to worsen redundancy provision.

Section 13 B of the Employment Equality (Age) (Amendment No 2) Regulations 2006

(1) A minimum age for any member of a scheme for payment of or entitlement to a particular age related benefit on the grounds of redundancy where it is enhanced in accordance with sub-paragraph (2) and paid either with or without consent (whether of an employer, the trustees or managers of the scheme or otherwise).

(2) The enhancement of any age related benefit payable to or in respect of a member on the grounds of redundancy where the enhancement is calculated in one or more of the following ways:

(a) by reference to the years of prospective pensionable service a member would have completed if he had remained in pensionable service until normal pension age;
(b) by reference to a fixed number of years of prospective pensionable service;
(c) by making an actuarial reduction which is smaller than if early retirement had been on grounds to which paragraph 12 applied; or
(d) by not making any actuarial reduction for early retirement.

(3) Sub-paragraph (1) shall also apply to different minimum ages for different groups or categories of members..

Branches are urged to continue to advise Glyn Jenkins head of UNISON’s Pensions Unit where the changes are being used by employers to stop them from awarding adequate compensation.

Who Runs the LGPS?

Phil Woolas, the DCLG Minister, has announced details of the Government's reform of the LGPS governance arrangements. For the first time in the history of the scheme, trade union representation will be enshrined in the management of investments and administration. Administering authorities will be required to establish, at a minimum, an advisory panel to the main council committee and give the representatives voting rights. Further details will be circulated. The proposed governance arrangements will be included in the draft Regulations to be released shortly.