Public Sector Pension Reform In Trouble?

jamesd

Talks between the government and unions to find some alternative that isn't age discrimination would seem to be the sensible approach now this tribunal has in some effect told the unions that what they fought for was wrong. Given the same budget I assume they could come up with something, particularly given the way the state pension change also helps those closer to state pension age. The SP isn't part of the deal but it is still handy extra help for the transitional protected members that can make things more palatable.

At least the "yes, we'll spend the extra money" part has been agreed, so it's just a case of sorting out how to spend that money legally, then how to explain the necessity to the employees and members.

Tromking

Thicko2 wrote: »

Any thoughts on the government's next actions? Presumably appeal regardless but looks forlorn hope.

If Fireman and Policeman win their appeals could get very interesting.

Spread the transitional funding over all staff groups? Lots of !!!!ed off people then whose retirement plans affected again.

Surely the most likely outcome is that employees will revert back to their original schemes?

jamesd

It's only the transitional protection that was ruled unlawful, not the change of base scheme. So change to Hutton plan with all negotiated changes except transitional relief would be the first place to go. But that seems unlikely since some transitional relief time has happened already. Next stopping place might be using some of the agreed funding to provide equal protection to all employees of any age who want it, to cover just the time that relief has been provided so far. Then negotiate on how to spend the rest of the money, if any is left.

BobQ

hyubh wrote: »

The '10 years within NPA in 2012' thing was just something done for every public sector scheme, albeit not necessarily in the form of keeping oldies in the old version of each scheme (in particular, the LGPS got an underpin instead). Is the implication that no transitional protections are better than some? (Genuine question... if I've put things too crudely, I'm all ears for the reason!)

The implication is that those within 10 years of retirement got more favourable treatment than those who had longer. The transitional protection is just a way of removing the unfairness created by the arbitrary decision (ie its not fait that someone 10 years from retirement are treated differently to those who are 10 years + 1 day.) However, the difference for the Judges is that the transtional arrangements are much longer.

The judges decision seems to have been purely about age discrimination. I canno seewhy other forms of discrimination do not apply. The problem is that having made the decision to give favourable treatment to those closer to retirement, its fairly obvious that it is discriminatory based on age (most given favourable treatment are older). In this case the judgement concluded that it was not objectively justified. But in most schemes the favoured group will have more white males and less women and non-whites and the less favoured group will be the opposite. That is more difficult as objective justification does not apply.

Of course its probably not true of all schemes (eg MPs).

BobQ

Thrugelmir wrote: »

If people wish to opt out as they would prefer the income why would it be illegal. Not advisable perhaps but for some people a necessity.

It might not be illegal, but it may breach employer codes of practice to encourage/pressurise staff to opt out?

BobQ

jimi_man wrote: »

Yes, exactly that. The Transitional Protections were put in place, largely to appease the unions. They were an offer by The Treasury Secretary to the TUC during the negotiations, in an attempt to stave off a load of strikes. The original Hutton proposals didn't contain any such protections; it was recommended that everyone should go straight on to the new pension scheme and according to the judge's conclusions, that wouldn't have been discriminatory.

I think you are wrong about Hutton. It was nothing to do with the unions.

"Ex.50 The Commission’s expectation is that existing members who are currently in their
50s should, by and large, experience fairly limited change to the benefit which they would
otherwise have expected to accrue by the time they reach their current scheme normal
pension age. This would particularly be the case if the final salary link is protected for past
service, as the Commission recommends."

This is from Hutton's final report

The negotiations were about details not principles. Its patently obvious that if you just introduce it for those a certain time from retirement age it will require some for of transition to ensure fairness at the cliff edge.

Ironically, in trying to do the right thing and appease the unions, it seems that by putting in these Transitional Protections, they have fallen foul of discrimination, hence why the judges won. The Fire Service are currently in the final part of their case and the Police also have one lined up fairly soon after. One assumes that they will follow in a similar fashion as they are more or less based on a similar premise.

What is amazing is that these schemes did not notice the discriminatory aspects of the schemes when they undertook the Equality Impact Assessments that they are legally required to have done. Of course the Government were in a hurry!

One wonders how the Govt will resolve the matter. Interesting times.

Indeed. Abolish the Equality Act?

BobQ

jamesd wrote: »

Yes, it does seem that the unions sought and obtained transitional protections that discriminated against the majority of their members on the basis of their age. Outrageous that the unions which were supposed to be looking out for them argued so hard and even got those members to strike in favour of being discriminated against.

I think you are being unfair. The Government was elected in 2010 on a pledge to reform public sector pensions as part of its austerity measures. The Government accepted the recommendations of Hutton that there should be some protections for those who were closer to retirement. You can argue about whether 10 years from scheme retirement age is the right timescale, but there is an objective justification for age discrimination for those who have relatively little time to adapt. In this case people less than 10 years from retirement being told they are now an additional 6 years away. Transititional protection is a common practice to avoid unfairness at the point the change applies.

You may be outraged but unions need to balance the interests of all their members. There is no reason for a union to object to this when their memberships are usually skewed to the older age groups. There has to be some pragmatism in negotiations when the Government has already made a decision on the principles. The point you seem to ignore is that the unions did not accept the changes. They generally told their members that the Government was intransigent, they had gained some concessions and this was the "best that could be obtained by negotiation". In most cases there was no appetite for taking industrial action to oppose the changes.

I do wonder though: what percentage of the union negotiators and executives were in the group that was to benefit from the discrimination?

National negotiations are usually conducted by the full time staff of the unions, not the employees.

BobQ

jamesd wrote: »

The decision and my post were about the transitional protection, not the main Hutton deal, for which Hutton recommended no transitional protection on the grounds that it would be age discrimination. This tribunal just agreed with Hutton that in the case of the judges the transitional protection was unlawful age discrimination.

I have quoted above the Hutton Report which did recommend transitional protection measures.

jamesd

BobQ wrote: »

I have quoted above the Hutton Report which did recommend transitional protection measures.

That is not true in relation to the age protection measure. Quoting from the tribunal decision, and not the incomplete Hutton quote you gave:

"20. In its final report, at paragraph 7.34, the Hutton Commission said:

'The Commission’s expectation is that existing members who are currently in their 50s should, by and large, experience fairly limited change to the benefit which they would otherwise have expected to accrue by the time they reach their current scheme NPA [normal pension age]. This would particularly be the case if the final salary link is protected for past service, as the Commission recommends. This limitation of impact will also extend to people below age 50, proportionate to the length of time before they reach their NPA. Therefore special protections for members over a certain age should not be necessary. Age discrimination legislation also means that it is not possible in practice to provide protection from change for members who are already above a certain age.'

21. Lord Hutton's commission thus recommended no transitional provisions beyond the protection of accrued rights..."

Far from recommending transitional protection, the portion you misrepresented was explaining part of why no more than preserving accrued rights should be done. And this tribunal delivered just what Hutton wrote about it being impractical age discrimination, ruling it unlawful.

Paragraph 41 quotes the introduction to Hutton saying that this preservation of accrued benefits would be fair to those over 50.

But see the next post for the rest of para 21.

jamesd

So far as the union or government aspect goes, paragraph 21 of the decision continues with quotes that the government did not agree with Hutton and thought that there should be some age-based transitional protection, it's well worth a read. However, you should then go on to read paragraphs 43 and 44 and 45 where there are quotes about the great importance attached by the unions to going beyond just preserving acrued benefits.

As paragraph 47 says, it was clearly "an important reason - and probably the most important reason" to satisfy the unions that the government went beyond the accrued rights preservation of Hutton and added the age thresholds for transitional protection that this tribunal has now ruled unlawful for judges.