On Friday Inside Housing Magazine reported on some of my comments about how angry UNISON members will be if employers tried to close their pension schemes or raise contributions so high that schemes would have to close anyway since no one could afford to join.
The world is a very different place from where it was 3 years ago, when some employers took advantage of the recession to close schemes or increase contributions. While we are certainly not out of the economic woods yet, most Housing Associations are now enjoying record surpluses and paying their Executives inflation plus pay rises and bonuses.
Modern day Defined benefit pension schemes are affordable and sustainable. If any employer decides now that it wants its employees to end up dying in miserable retirement poverty then they could find themselves in for a fight.
The world is a very different place from where it was 3 years ago, when some employers took advantage of the recession to close schemes or increase contributions. While we are certainly not out of the economic woods yet, most Housing Associations are now enjoying record surpluses and paying their Executives inflation plus pay rises and bonuses.
Modern day Defined benefit pension schemes are affordable and sustainable. If any employer decides now that it wants its employees to end up dying in miserable retirement poverty then they could find themselves in for a fight.
2 comments:
Sadly,SHPS (The Pensions Trust) has itself done a lot of damage both forcing the closure of final salary schemes for those employers in the sector with little or no housing assets, the NHF and Equinox are two notable examples the the Unite Housing branch had to deal with.
For larger Housing Associations, you are absolutely right to point out that increased surpluses should sway them to maintain final salary schemes where they exist. Even more so since the hypothetical pension liabilities, which are due to increase , are set against the overall asset portfolio of the associations, which as they are based on residential property prices, have also increased. As such, Housing Associations should be able to absorb the (temporary) extra liability on their balance sheet for the next few years.
In terms of collective bargaining, I have found the management side have been somewhat more sympathetic to union demands to maintain final salary schemes where they exist. Unlike other union demands that increase the overall wage bill (.e.g. inflationary pay increases), almost Senior Managers and Exectutives in Housing are long term members of the final salary (DB) schemes (a very high level of membership in DB compared to low levels for frontline staff before auto-enrolment), as such they also have most to lose when the schemes close. With the principle in mind that 'turkeys don't like to vote for Christmas" it is possible to gain a sympathetic ear from Executives when bargaining on pensions.
Good points (as usual) Bryan. Ironically I am not a fan of Final Salary Schemes because they tend to favour the higher paid (a decent - note decent career average is much better and fairer).
Apart from the fundamental argument that the social mission of housing associations should not be in any way about ensuring a miserable old age for its workers. The thing that we need to keep banging on about with Pensions is that getting rid of the scheme does not in any way get rid of any deficit. It can make things worse.
also the yardstick by which they measure "deficits" is broken. Gilt yields are at record lows. They are so low that investors are actually paying the government for the privilege of borrowing from them. This is unsustainable. Yields will rise and liabilities will collapse.
It will be the case of "deficits? What deficits?". We could even be back to the roller coaster of massive pension surpluses.
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