Re-elected to UNISON National Executive Council (NEC) 2023-25

This morning the biannual UNISON NEC election results were announced and I was pleased that both Denise Thomas and I were elected (after a one term 2 year gap) representing (Community Service Group) all Housing Association and Charity UNISON members.  

Respect to my tfrc opponent for my seat, Kevin Jackson, who has acted well in this contest, unlike in my view, many members of the the slate he endorsed  (1677 vote for me to 1539 for him)

This photo is from the Community Service Group Conference held last year in Glasgow, when there was a series of walkouts at the conference of delegates, disgusted that the tfrc President was chairing despite the well known complaints against him by numerous unison female members of bullying.  

He has now gone from the current UNISON NEC. I believe after these elections that the next NEC will be more balanced and will reflect (what we use to call all the time and still should) rank and file UNISON members.

In the meanwhile there is a serious dispute with my employer over pay claim, closing Defined Benefit pensions and trade union victimisation. Today I have been in touch with two senior elected metropolitan Council representatives about this dispute, who are horrified about what is being done. More to follow. . 

Pensioners being ripped off

A good article here on the arguments put forward by "pensions campaigner and former government adviser Dr Ros Altmann" that pensioners who buy "annuities" when they retire are being ripped off.  Annuities are insurance products that you buy when you retire using the money you have saved while at work in a DC (Direct Contribution personal pension) scheme.

"The Financial Services Consumer Panel, which monitors the FCA, recently published a report after a 12-month study into the annuity market. Investigating 15 online firms, and using a £49,950 pension pot example, minus a 25% lump sum, it found fees for the same service went from 0.75% to 3.35%, with costs ranging from £281 to £1255".

Not only fees but annuity "rates" (how much you get after fees) in some companies (even well known ones such as the Pru) are simply rubbish. Even the better schemes offer poor value due to the current price of government bonds called gilts which determine how much you get from annuities.

I am pleased that she highlighted that most annuities are "single life" only. That means unlike Defined benefit pension schemes that cover partners automatically - with a "single life" annuity when the retiree dies - his or her partner get nothing.

In my workplace most employees are in a DC scheme. I dread the day that I will called to see the spouse of a retired union member who wants to know what will they now live on? That day will come very soon.

What was not mentioned is how most people also buy a "level" annuity when they retire. This means  that there is no protection against inflation so each year their pension is worth less and less.

According to this site if you retired 5 years ago inflation would have reduced the value of your level pension by nearly 14%. If you retired 10 years ago by a staggering 30%.

What a mess. Pensioners are being cheated by excessive fees, poor returns and no protection for their loved ones or against inflation.

We still desperately need modern collective Defined Benefit pensions for all.

Hat tip Dave Watson via UNISON Weekly News.

Why is this government destroying Pensions, Charities and Jobs?

This morning I read about the Charity "People Can" being forced into administration and 300 jobs being put at risk.

I don't know all the reasons why this has happened but we are told it was due to its "pension liabilities". Whatever that actually means?

But I do know that the charity and its workforce protects victims of domestic violence, stops ex-offenders reoffending and gets the homeless into secure and safe accommodation.

The  Administrators, PriceWaterhouseCoppers (PWC), is not of course an evil organisation, however is not that well known for its concerns about battered women, ex-cons wanting to go straight or homeless kids desperate to get off winter streets.

It is known that "People Can" has a history of financial insecurity.  But I wonder what is the real reason for the "pension liabilities" (or deficits) in the first place that are supposed to have led to the potential sackings and loss of vital services? Was it due to inadequate financial planning or that its defined benefit pension scheme was in some way unsustainable?

No one has mentioned either about whether the pensions of the charity staff are truly safe or are they being subject to the tender mercies of the "Pension Protection Fund"? The PPF is a "good thing" but do not think for a moment if the PPF steps in that you have nothing to worry about your retirement. You do.  If you haven't already retired you may find your future pension significantly reduced.

My biggest gripe is that this closure and threat to peoples pensions in "People Can" and elsewhere could be based on complete and utter stuff and nonsense.

Due to outdated and deficient accountancy rules called "Mark to Market", perfectly good defined benefit pensions schemes are going to the wall. Sometimes bringing their organisations down with them. For no good reason. Perhaps we ought to shout out the emperor has no clothes – these so-called pension deficits are not real! They do not reflect the true future costs and liabilities facing pension schemes.

Schemes usually have to price these costs according to the return on Government loans called gilts. Due to our abnormal economic conditions these gilts currently have negative prices. This means scheme deficits have increased massively and have nothing to do their underlying strengths or weaknesses.  Quantitative Easing (QE) by the Bank of England is making things even worse. This has resulted in gilts yields being in even more La La land. They are at a 200 year financial low.

Everyone knows this but why is it allowed to happen and destroy perfectly good pension schemes and then make its members live and die in poverty? Even worse, relying on the tax payer to subsidise poverty employers who pay their pension pittances. Is this the sort of society that we really want?

The government has committed to act on this but has just  failed to do so! The Pension minister Steve Webb promised in June to do something about what he called this "nightmare" which is "killing" perfectly good pension schemes and that he would "not idly stand bye" and let this happen.

I'm not holding my breath Steve. Many more jobs, services and decent pensions schemes will not last, unless you, Clegg and Cameron get their fingers out and do something.

Dr Hari Mann: RSA Tomorrow's Investor programme

Dr Mann was the first speaker at last weeks meeting of the Association of Member Nominated Trustees (AMNT).

He spoke about the 4 year research programme into investments by the Royal Society Arts/Tomorrow's Investor Programme. He and co-author David Pitt-Watson published this report in July on Collective Pensions. 

His key theme was the high cost of many defined contribution pension schemes and the lack of transparency over charges. He prefers the Danish model where you find clear cost transparency which allows market forces to work effectively and drive down charges. In the UK the pension annual management charge does not include all costs. Some schemes charge up to 5% of contributions.

 

While it is clear that due to cost well designed Collective DC schemes are far better than individual DC. They are still clearly inferior than Defined Benefit schemes and always will, be since the risk in all forms of DC, remains with the employees. Also the return from pension annuities is so miserable that you need to save huge amounts in order to receive a decent income from DC.

 

Surely there is no getting away from it that it is better to retain (and reform when necessary) DB schemes? The real problem with DB is not that it is unaffordable but that of outdated accounting standards and the resulting volatility in valuations?

"Pension schemes need urgent rule change"

Catching up after annual leave last week. Just read Janice's important letter on pensions published in the Guardian on 25 July.

"Phillip Inman's welcome report on the dire state of private sector pensions (No wonder ministers are panicking over pensions, 23 July) nevertheless omits one major reason for the horrendous deficits of defined benefit (ie final salary and career average) pension schemes: a couple of clauses buried in the 2005 Pension Regulations. The clauses force defined benefit schemes to conduct valuations using methods derived from free market theory: basing scheme projections, decades into the future, on the state of the markets on one day. If the markets are fine, the pension fund is fine. If not, schemes are in trouble. These rules have caused wild volatility: no one has a clue about how big their deficit will become. Last year the Pension Protection Fund reported DB schemes' combined deficits as £8.3bn. A few weeks ago they passed £300bn.

The Association of Member Nominated Trustees, whose members are trustees of pension schemes with collective assets of about £200bn, says DB schemes must be enabled to ride out short-term market volatility by smoothing the valuation – taking an average of asset values and gilt yields over several years. The PPF has adopted this method for itself. What's good enough for the PPF is good enough for the schemes that fund it. The AMNT has submitted rule changes to the Department for Work and Pensions, and our views are shared by organisations such as the CBI and the National Association of Pension Funds.

This may sound like a dusty technical issue. But what's at stake are the pensions of more than 2 million working people, and the chance for the millions coming after them of having a decent pension.
Janice Turner
Co-chair, AMNT

AMNT newsletter – July 2012: meeting review; trustee guide discount

Association of Member Nominated Trustees

 Dear member,

Two weeks ago the AMNT hosted its summer members’ meeting with a number of topical discussions and presentations.

The event, which took place at AXA Investment Managers’ London offices in Newgate Street, began with a presentation by co-chairs Barry Parr and Janice Turner on the association’s latest developments.

Copies were distributed of AMNT’s recent submissions to the Dept for Work and Pensions inquiry into occupational pension schemes and to the Red Tape Challenge. We reflected the consensus of  all our meetings and called for DB trustees to be given the option of using smoothing when carrying out our triennial reviews.

DC trustees were updated on the discussions going on within the pensions industry, in which AMNT is participating, on development of a better type of DC scheme.

These included the finalisation of the constitution, an update on the AMNT’s lobbying activities and an insight into the potential sponsorship opportunities the association is in the process of finalising.

Then committee member Owen Walker gave a presentation on the development of the website.

This was followed by AMNT member and chief executive of FairPensions Catherine Howarth giving a presentation on the shareholder spring and how this affects trustees.

FairPensions has produced a briefing on executive pay, which has been designed with busy trustees in mind.

The idea is to make something available which gives trustees some handy questions they can ask fund managers if they want to be sure that a tough line is being taken on executive pay packages.

You can read it here: http://www.fairpensions.org.uk/sites/default/files/uploaded_files/investorresources/ExecutivePay2012.pdf

Members were then given a presentation by an AXA IM spokesperson on how investment companies can also help trustees to improve their shareholder engagement.

The meeting then split into breakout groups, focused on DB and DC issues.

The working group on defined benefit pensions concentrated on discussing a draft produced by DB working group chair John Gray on what to do if your scheme sponsor announces they want to close the scheme.

This draft is at an early stage and John Gray (john.gray@amnt.org) is very keen to hear from you if you have been through this process, regardless of whether the scheme closed or stayed open.

We are now revising the draft guide, carrying out further research and checking and we hope to circulate it to everyone in the near future. If you are interested in contributing to it please contact John.

After the break, members received a presentation by friend of the association and executive director of OPDU Jonathan Bull on the benefits trustees can receive of indemnity insurance.

Jonathan’s presentation can be downloaded by clicking here.

30% discount on trustee guide

The publishers of The Guide for Pension Trustees are offering AMNT members 30% off this publication which is on the reading list for the PMI trustees’ qualifications. The Guide is a practical and comprehensive manual for all pension trustees.

It contains the essential practical, legal and commercial information that trustees need in order to perform their roles efficiently, accurately and lawfully. You will receive free quarterly updates of the guide, reflecting the latest developments in the sector, and you will have free access to the guide online, which includes additional modules and data tables.

It normally costs £265 but the AMNT discount brings this down to £185.50, and all those taking up this offer will also receive a free copy of the Pensions Pocket Book 2012, which normally retails for £47.50. To obtain the discount you have to quote offer code GPTCW110 when you order. Telephone 01235 465 574, fax 01235 46556 or email subscriptions@marston.co.uk.

Ask your fellow MNTs to join us

The meeting was delighted to hear that AMNT has now grown to about 240 members, and we are responsible for pension funds with collective assets of an estimated £200-billion.

The more members we have the stronger our voice will be in putting forward your concerns to the industry, the regulators and the government, so if you could suggest to your fellow MNTs to join us that would really help.

Kind regards, AMNT Committee

(I posted this late so had to take out an invite to a conference that was out of date)

UNISON NDC 12: What to do if your employer wants to close your pension scheme?

This picture is of me supporting the call for the TUC demo on October 20th was in the Friday morning edition of "London Calling" which is our regional conference new sheet. Next to it was this article I had written about:-  

"What to do if your employer wants to close your pension scheme?"

Tomorrow’s debate on the future of the traditional public sector pension scheme will be very important. But we must also remember the current threat to UNISON members in the Community and Private sectors.

Some employers have started consulting our members who work in Charities and housing association about getting rid of their pension schemes held with the Pension Trust and the Social Housing Pension fund. While the contractor Sodexo (which provides many privatised town hall and hospital services) is at this moment trying to close one of its defined benefit schemes.

If you are aware of any attempt to close your pension scheme you must get in touch with your branch ASAP. Do not believe the misinformation being put out about by some employers about how their pension fund deficits means they have no choice but to close. This is rubbish! In nearly all cases such “deficits” are completely artificial. Its "funny money". As everyone knows due to the recession the stock market is depressed and government bonds (which are used to measure such deficits) are at a 200 year historic low.

Most importantly, if you close your pension scheme it does not mean you get rid of the deficit. It is still there and could make things even worse since a closed pension fund has to sell its long term investments to raise cash to pay out existing pensions. 

I am writing a guide on what trustees and members should do if their employer tries to close your pension scheme. This should be out soon.

If the new look LGPS 2014 is accepted I hope it could become a model and beacon for all pensions schemes and lead to a rebirth of guaranteed defined benefit schemes - especially for the 60% of private sector workers who get no pension whatsoever from their employer".

In defence of DB

This is an article I wrote on behalf of the AMNT in defence of Defined Benefit Pension schemes for all.  It was published in Engaged Investor in its December edition.

"While the Association of Member Nominated Trustees (AMNT) has no formal view on the dispute between the Government and the public service unions, many of our
trustees are strong supporters of defined benefit (DB) schemes. 

In fact, one of the most active AMNT working groups is dedicated to defending and promoting DB schemes and almost exclusively comprises private sector DB trustees. This group is convinced that DB should remain the cornerstone of occupational pension provision.

DB trustees are also concerned that the often inaccurate media attacks on public sector DB schemes are having an adverse impact on the standing of their schemes with their sponsors.

It is often forgotten that alongside the six million workers in the public schemes there are still 2.4 million continuing to build up DB benefits in private schemes. It is important that
the pension myths about all DB schemes are exposed and countered.

The first myth is that DB is “gold plated”. The average local government pension is only £4,000 per year while the average retired female NHS worker’s pension is less than £2,800 per year. The maximum that many retiring today will get in typical DB schemes is half pay and a lump sum typically 1.5 times their final salary. Are people really saying half pay after a lifetime of saving is too much?

Another myth is that DB is too expensive. Future employer contributions for many schemes are less than 14% and with some, such as the NHS’s scheme, it has already been agreed that employer contributions are capped at 14% and any future increase in cost will have to be wholly met by the employees.

In the absence of compulsion, unless we have pension schemes which are attractive to employees then people will simply not join or opt out. This will leave the taxpayer with an even greater bill to support these people on the poverty line when they are old.

Nobody is arguing that DB schemes are perfect, or that hugely damaging mistakes were not made in the past. Deficits for past accrual are often confused with future costs of DB, however. Most DB trustees remain convinced that people want a degree of certainty in their retirement. They want to share the investment risk with the employer and the state, not to personally bear the brunt of it.

There are many changes that could be made to improve DB. These could include merging DB funds and schemes; bringing together the 100 or so different local government pension schemes.  We need changes in the accounting standards that currently treat century-long pension benefit liabilities as if they were a credit card bill. We need to get a grip on spiralling fees. We need to improve governance and make sure that savers are not ripped off in future financial scandals.

The real scandal in pensions is not DB schemes but the two thirds of private sector employers who do not pay a penny towards their employees’ pension and the 50% of private sector workers who have no pension provision whatsoever".

"Can pension funds shape the future of capitalism?"

Catching up on things. Last month I went straight from the TUC Trustee Pension Conference to the Fair Pension's Guest Lecture at the House of Commons. This was the second presentation I had been to that day on "Capitalism and pensions". I was with a notoriously quiet and reserved UNISON colleague who is a Local Government Pension (LGPS) expert. The lecture was given by Professor Keith Ambachtsheer, Director of the Rotman Institute for Pension Management (left of picture).

He was introduced by John Cruddas MP who is the Chair of the All Party Parliamentary Committee for Responsible Investment. The meeting was Chaired by Catherine Howarth of Fair Pensions.

You can read an account of his speech (and that of Mark Fawcett, Chief Investment Officer at NEST - right of picture) and the full text here. My take on Ambachtsheer is that he believes that Capitalism must be transformed by those who invest in pensions acting as active owners and demanding that capitalism is transformed into a sustainable and wealth creating model. Rather than mainly benefiting "agents" and being subject to their whims.

What I also found striking in his speech was that the traditional argument over pensions about which is best: Defined Benefit or Defined Contribution? Is the wrong question to ask. Instead you should be more concerned with Scale (size of fund), Governance, Investment belief and Fees.  I asked a question about the Local Government Pensions Scheme (LGPS) which has around £140 billion in assets but is split into 101 different funds. Ambachtsheer thought this was just completely wrong to have so many small funds.

Afterwards we went to the St Stephens Tavern where we had some very "interesting" conversations about the future of the LGPS from across the political divide.

Pensions: Who on earth is looking after our money?

An employer covered by my trade union branch offers a Group Stakeholder Pension scheme with Standard Life. As "Direct Contribution" (DC) schemes go it is pretty good but employees have to join Standard Life to benefit from employer contributions. Recently a union member in this pension scheme came to me with a letter from Standard Life which worried him. This letter explained that the company had recently found out that there had been some mistakes in its marketing literature about their Sterling Fund which as not to their "usual high standards". They offered to move his money into another fund and make up any loses.

You might think “What a decent company Standard Life is for doing this, well done for owing up and doing the right thing”.

It now turns out that Standard Life has just been fined £2.45 million for misleading pensions customers “Insurance firm claimed money would be placed into low-risk fund when it was invested in toxic mortgages” The Guardian .  They were forced to pay and had actually shamefully tried to get out of paying anything beforehand.  They had to pay policy holders in the end over a £100 million in compensation!

While I hope that shareholders will paying for this compensation and the FSA fine (I am sure that the poor old policy holders will pay somehow - I also have a paid up policy with Standard Life) it does call into question who is checking up on Standard Life on behalf of policy holders. Who can not only call to account Standard Life over their marketing material but also question why on earth were they investing in toxic mortgages in a just before you actually retire “safety first fund”?

Most proper pension scheme (defined benefit or defined contributions) have member trustees to do this job. Such Group Pension or insurance schemes don’t have trustees. They can (see here) have “management committees” but they have no teeth or legal status. What we need is a requirement for trust based effective policy holder representation on all pensions’ schemes.

After all, surely we all now know what happens when you get capitalism without any owners?