PLSA Local Government Pension Conference 2018

Just arrived for the Pensions and Lifetime Savings Association annual conference in Gloucestershire as
Newham London delegate from Investment and Accounts Committee.

Some interesting speakers and seminars ahead.  Local Government minister Rishi Sunak MP, fees, ESG, economy, change, the regulator, cost cap, funding & current affairs.

Will blog as and when

Marks & Spencer close their staff pension scheme and lose £131 million

M&S pension surplus falls £131.3m due to DB future accrual closure

Written by Talya Misiri

24/05/17

Marks and Spencer has revealed that its pension surplus fell by £131.3m in the year to April 2017 due to the closure of its defined benefit scheme to future accrual.

In its full year results, published today 24 May 2017, the UK retailer stated that at 1 April 2017 the IAS 19 net retirement benefit surplus was £692.8m from £824.1m the previous year.

M&S explained that its reduced surplus was largely a result of the closure of the UK DB scheme to future accrual, which lead to a one-off curtailment charge of £127m. The scheme closed to new members on April 2017.

The report noted that as all remaining active members of the scheme transition to a deferred status, all future pensionable increases are to be in line with inflation, CPI, rather than to the lower one per cent salary cap applied to the active members.

Additional costs of £5.4m that is directly associated with the closure, primarily in relation to third party advisory costs have been incurred.

Pension funding rose year on year from £118.4m in April 2016 to £135.3m in April 2017. Pension costs charged against operating profit fell slightly to £100.3m this year, from £102m in 2016.

Partnership liability to the Marks & Spencer UK Pension Scheme remained at £71.9m year-on-year.

“The first limited partnership interest (held by the Marks and Spencer UK Pension Scheme), entitles the Pension Scheme to receive an annual distribution of £71.9m until 2022 from the Partnership. The second partnership interest (also held by the Marks and Spencer UK Pension Scheme), entitles the Pension Scheme to receive a further £36.4m annually from 2017 until 2031,” the report outlined".

WTF? Why are Marks and Spencer robbing their staff of a decent pension scheme when their fund is in surplus and it costs them £131 million to do so?

No wonder so many people voted for Brexit and why we need a Labour Government to tackle corporate greed and stupidity.

Hat tip "Pension Age". 

Newham Local Government Branch AGM 2015 - The threat to your pensions- "if it sounds too good to be true then..."

On Friday I was invited to speak at the annual general meeting of the Newham UNISON branch at the Town Hall in East Ham.

This was in my trade union capacity as the Chair of the London UNISON pension network. This is my written speech below.

"Thank you Gloria and Newham UNISON for inviting me to speak on this very important issue. Like many of us in the Labour movement I wear a number of different work hats but I am proud to be here today as a Unison rep on my local government pension scheme (LGPS) committee for the past 20 years or so.

I was privileged to talk to this AGM some years ago about the many advantages of joining the LGPS. I now want to speak to you today about a possible threat to your pension and that of your families and friends.

It is complicated but maybe it is best if I outline what I believe to be the problem and what I think is the solution, then throw it open to the Q&A.

Firstly, let us never forget that Pensions are a fundamental trade union issue. In fact one of the founder unions that went to form UNISON was set up specifically to argue for pensions for its members. A former manager of West Ham Council trams was instrumental in setting up that union and the LGPS.

In my grown up job as a housing officer in the East End of London, I see first hand the miserable and degrading poverty that so many of our elders live in. Too frightened to put the heating on in winter, surviving on cheap out of date foodstuffs, too poor to buy their grandchildren treats.

In many ways, the current pension future facing workers is now even worse. Millions of workers in our sector have no access to any employer pension, since they work part time or are paid too little. Millions more are being cheated by their employer with tiny and inadequate contributions. While complete untruths are said about the sustainability of defined benefit schemes such as Local Government Pension scheme and other public sector schemes.

To top it all, this Tory led government, will from next month April 6, allow thieves and con merchants to steal and feast upon our members pensions, in what I have no doubt will be the greatest ever miss-selling scandal.

From April 6 this year, this Conservative led government is about to play a huge trick on ordinary working people. People who have skimped and saved over the years to put money by for their futures. This money is being deliberately put at risk and the only ones to benefit will be the City crooks that finance the Conservative Party, as they rob our members over the age of 55 of their money and that of their spouses.

Remember the Tories hate anything that is collective, they don't want pension boards or independent trustees looking after their members money and making sure that it is safe. They would rather dismantle our person schemes and hand them over directly to big business to profit from.

Tory Chancellor, George Osborne, calls April 6 "pension freedom day". Colleagues, this is not freedom, it is an occupation, an occupation by those who see you as easy pickings; an occupation that will destroy lives and end up with many of our members retiring into and dying in poverty.

Our members in the Local Government Pension Scheme and other funded Pension schemes will be targeted by armies of thieves, spivs and charlatans, as they did under Thatcher, when millions of people were told to buy personal pensions and sell their company schemes.

Those of you here who have pension money invested in stakeholders or auto enrolment schemes will also be targeted by those wanting to steal your futures as well. Even worse, last week during the budget, the Tories announced that pensioners who have already taken out private pensions will also be able to cash them in. At the cost of a tax liability and even more rip off charges.

We must as a union save our pensions and save our members from having them stolen from them and exchanged for snake oil.

We have a responsibility to make sure that our pensions are safe. As I said before one of the reasons for forming unions was for decent secure retirements and nothing has changed since, so we must do whatever is necessary to defend our members and defend their pensions. Thank you".

(picture Newham UNISON Chair Gloria Hanson, regional officer Dan Peppiat and area organiser Sally Tsoukaris - by coincidence today there was a feature on crooks planning to fleece pensioners)

"Four out of five service groups say vote 'yes' in the LGPS ballot"

Excellent news! The elected lay Service Group Executives of UNISON have voted overwhelmingly to endorse the new look Local Government Pension Scheme (LGPS 2014).

"Members covered by Local Government Pension Scheme in England and Wales are being urged to vote yes to a new LGPS 2014 scheme when they are balloted this month.

In all around 660,000 members in five UNISON service groups will be covered by the ballot, including:

• 580,000 members in local government;
• 40,000 in police and justice;
• 19,000 in higher education;
• 17,000 in community;
• 6,000 in the water, environment and transport service group.

The local government, police and justice, community and WET service groups are all recommending that members vote 'yes' in the ballot. The higher education service group is recommending that members vote 'no'.

Heather Wakefield, national secretary for local government and police and justice, who led the negotiations for UNISON says: "After months of talks, led by UNISON, we now want you to have your say on the proposals for the new Local Government Pension Scheme (LGPS 2014).

"UNISON is recommending that members vote yes in the ballot, because we believe that these proposals give most LGPS members - and especially women and low paid workers, who are the majority of members - a better pension deal.

"It is vital that members make their voice heard.

"Please tell your members to look out for their ballot paper which is being sent direct to the home addresses of all UNISON members who are in the LGPS or eligible to join."

The LGPS Scrutiny Group has decided on a joint ballot. It will run from 31 July to 24 August, and members can vote by post or online.

In Scotland, pensions are a devolved matter for the Scottish government and the Scottish LGPS is a separate scheme, with no clear proposals to change it. The LGPS in Northern Ireland is covered by different regulations and proposals are still under discussion".

More Key Facts about the LGPS 2014 (and Too Hot Ta Trot)

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More key facts from UNISON about the the new proposed Local Government Pension scheme (LGPS 2014).

• 90% of members willpay the same or less contributions as now

All pensionable service before 1 April 2014will retain a Normal Pension Age of 65

• Most part-time workers and those with actual pensionable earnings between £15,801 and £21,000 will pay less in LGPS 2014
• Over 55% of local government workers work part-time


Only those earning over £43,001 will pay more


They make up just 4% of LGPS members
• 95.6% members earn less than £43,000 - the point at which contributions increase


The LGPS 2014 will for many members deliver a better pension than LGPS 2008, especially for those with less than 20 – 25 years of membership
• But the average length of membership in the scheme is just 7 years, so most members will do better in LGPS 2014

• From 1 April 2014 the Normal Pension Age (NPA) will be at least 65 and will then increase in line with the State Pension Age – which is set to rise to 68 between 2044 and 2046.
• The existing Rule of 85 protections will remain. Members aged 55 or over at 1 April 2012 will be protected by an underpin, which ensures that those people will be no worse off as a result of these changes. Under the proposals there are no plans to remove the pension protection for those made redundant from age 55

• Those who have to work longer will get a bigger pension because they will be paying contributions – and benefitting from employer contributions for longer
• Because all earnings will be pensionable – including non-contractual overtime and additional hours for part-time workers – members will have bigger pensions than now
• Most UNISON members not in the LGPS give cost and low pay as the reason. The "50/50 option" will help them to join

I note that the blogging Miserabilist in Chief, Jon of the Rogers (failed ultra left candidate for London regional convener and General Secretary) has been having a pop at me over this post. Now of course he misrepresents what I have said (I do accept that some non trots do think we could have got a better deal - amazing but true) but since he also makes a series of blatant untruths about the impact of CPI, survivor benefits, the stability of the LGPS, accrual etc etc I would hope by now that very few people paid any attention to his whining and whinging.

He again attacks our staff which is unacceptable especially since as a NEC member he is suppose to be their employer. He also shows his ignorance of the difference between a guaranteed public sector pension scheme and a private sector scheme.

So desperate are they to continue with their calls for general strikes and student union toytown revolutionary politics they want to destroy a perfectly good pension scheme.

The bottom line is he and the other Miserablists support the continuation of a discriminative pension scheme which penalises low paid women workers and benefits senior management and Chief Executive Officers. Nuf said.  (Hat tip Mel for Youtube video)

Executive Remuneration – free seminar for pension fund trustees

Executive Remuneration – free seminar for pension fund trustees

Co-hosted by the TUC and Fair Pensions 2.00 – 3.30pm, Monday 21 May, Congress House with speakers:

Frances O’Grady, TUC Deputy General Secretary

Iain Richards, Head of Governance and Responsible Investment, Threadneedle Investments

Catherine Howarth, Chief Executive, Fair Pensions

Are current levels and rates of increase of executive remuneration fair and transparent? Are fund managers reflecting the views of beneficiaries in their engagement with companies on executive pay? What can pension fund trustees do to bring about improved practice in the area of executive remuneration?

You are invited to discuss these and other questions at a free seminar for pension fund trustees hosted by the TUC and Fair Pensions taking place from 2pm – 3.30pm on Monday 21st May, in Congress House, Great Russell Street, London WC1B 3LS.

 

Fair Pensions has produced a briefing for trustees on executive remuneration, which can be found at http://www.fairpensions.org.uk/sites/default/files/uploaded_files/investorresources/ExecutivePay2012.pdf

To register for the seminar, please e-mail trusteenetwork@tuc.org.uk

UNISON NEC meeting 8 Dec 11

Yesterday there was a UNISON NEC meeting on the 9th floor of the new UNISON centre in Euston, London.

I am a national member for  the Community Service Group (Housing associations and voluntary organisations) with my colleague from Manchester City branch, Isobel McVicar.

  

Obviously the Pension Strike and what to do next was a major item.  It was largely a positive and constructive meeting.  Some of the usual suspects were being a little silly but the vast majority of the NEC made intelligent and considered arguments and contributions.

Check out  the UNISON statement on the NEC here starting "We will hope for the best, but plan for the worst," UNISON's ruling NEC declared today as it assessed the effect of the 30 November pensions strike....The day of action was "an absolutely fantastic day, the proudest day of my union life," general secretary Dave Prentis told the meeting in London.....

While the blog UNISONactive reports also on the NEC meeting as well as on the Strike today over private sector pensions in Unilever, on which the NEC sent a message of support yesterday. (picture is actually after NEC Policy Committee meeting on Wednesday)

The Good Liberal Democrat

This is part of the speech on pensions that Janice Turner gave at a Liberal Democrat fringe event last week called "Pension reform – public, private and state – What’s fair?".  Also at this event was Steve Webb MP, Pensions Minister, Dave Prentis, UNISON and Danny Finkelstein, The Times.  Janice is also the Co-Chair of the Association of Member Nominated Trustees.  In her speech she firstly attacked the pension industry for for doing their best to try and destroy decent company schemes in the private sector. 

"I’ve devoted my spot to talking about private sector occupational schemes, because we’ve got an expert sitting next to me who will be talking about public sector schemes. But as a Liberal Democrat I can’t just say nothing at all about public sector schemes when millions of public sector workers are about to ballot for the biggest day of action since the General Strike.

A hundred years ago, Asquith and Lloyd George brought this country the old age pension and they did it by having the vision, and by having the courage and determination not to back down when the Conservatives insisted that the government couldn’t afford it. A century on and occupational pensions are just as necessary today. We all hope to retire with a pension we can live on, rather than just existing. But most of us aren’t going to get there.

In the public sector the average pension is a mere £7,800 a year, beneath the poverty threshold. The average for women is only half that. There is nothing gold plated about public service pensions. Now more than five million people are being told that the Conservative-led government can’t afford them and are proposing that they move to career average schemes, raise the age that they can retire on it, and link it to the state pension age so that it keeps going up; and cutting their take-home pay by increasing their pension contributions.

All this is on top of the government’s announcement that they were going to switch public sector pension increases to CPI instead of RPI. That move on its own will wipe over £100-billion off their pensions when they retire. £100-billion. The government really hasn’t thought this through. Have they considered the impact it will have on the economic recovery if nearly a quarter of UK households have a pay cut? If 5 million people reduce their spending and increase their retirement saving to compensate that may be enough to slow down the recovery.

It is not true that we can’t afford these pensions. Just like a century ago, the government can afford it, the Tories just don’t want to. They have other priorities like wanting to save rich people from paying the 50p rate of tax. These proposals go too far, they are unfair, this government isn’t listening, and for many people struggling with a pay freeze and spiralling inflation it will force them out of their pension schemes as they cannot afford the pay cut.

And it is wrong to suggest that public sector pensions are unfair to private sector workers. Private sector workers had their pensions savaged by the Labour government but that’s not the fault of ordinary public sector workers. I for one expect the British government to lead by example, to set the highest standards for the way it treats its workforce, and that means safeguarding their pensions.

So yes I believe there is a major crisis in occupational pensions and the government needs to stop trying to make it worse with its proposals for the public sector, and act now to start repairing the damage to private sector pensions".

"It will be the biggest since the general strike. It won't be the miners' strike. We are going to win."

UNISON General Secretary Dave Prentis warns the government of the biggest strike in 100 years (today's Guardian & also BBC report). 

All power to Dave's elbow.  Let us be absolutely clear.  Public sector pension funds are not in crisis.  They are not unaffordable.  They are not "gold plated".  The massive 50% plus proposed increase in contributions as well as increases in retirement age are an excuse to cut spending.  Nothing more and nothing less.  So nurse, teachers, carers, receptionists and town hall clerks are being forced to pay for the past theft, fraud and corruption of the financial services sector and the Banks.  Who are now returning to their bad old ways with huge increases in their bonuses and bankrolling their mates in the Tory Party.  While at the same time said public sector workers are having their pension contributions increased they are facing years of pay freezes while inflation cuts their pay by 5% per year (and gas prices going up by 20%).  If pension subs go up by 50% many people will leave the schemes and they could collapse.

Only a few years ago there was a serious dispute over pensions which brought about radical change.  Much of which the unions were not happy about but compromised in order to secure the funds future.  Now this agreement is being ripped up.  Forget the fibs and scare mongering of the Daily Hate and the Tax Evaders Alliance.  The Local Government Pension Scheme is cash rich and worth over £160 billion.  The NHS pension scheme has a cost sharing agreement.  If employer contribution goes over 14% (close to the traditional final salary norm) then the employees will bear the cost.  Even the Conservative Party dominated Public Accounts committee accept that public penisons are affordable. Finally, never forget that Hutton found that the average public sector pension for a women is only about £4000 a year.

Dave Prentis makes it clear that he still wants to negotiate and that we will not be taking industrial action for industrial actions sake - but as a means to get an acceptable agreement.  Dave quite rightly expects the full support of the Labour Party over this dispute.  I am pleased that Newham Council recently passed this motion at our Annual General Meeting.

Tomorrow UNISON begins its Service Group conferences in Manchester and its National Delegate Conference begins on Tuesday morning.  Pensions will be the top issue.

GMB mythbuster on the Local Government Pension Scheme

MYTHS EXPOSED Inaccurate information and misleading statements about the Local Government Pension Scheme (LGPS) are rife in the media. This guide highlights the most prevalent and erroneous of these myths and sets out the realities of the LGPS. MYTH: Workers in the private sector have to pay for the LGPS while local government workers reap the benefits REALITY: Everyone pays for everyone else’s pension. Companies with occupational pension provision for their employees include pension costs when pricing their goods and services. All taxpayers pay for the cost of inadequate pension saving (increasingly prevalent in the private sector) through the tax and national insurance spent on increased take up of state benefits and demand on NHS and council care services. MYTH: 25% of council tax is spent on the LGPS REALITY: This misrepresentation deliberately ignores the fact that 75% of local authority income comes from sources other than council tax. The true figure as reflected by the Society of County Treasurers is around 5% (£65 a year for the average council taxpayer). MYTH: LGPS costs are soaring and the scheme is unsustainable REALITY: The cost of the LGPS to employers for service from April 2008 (2009 in Scotland and Northern Ireland) was reduced during the reforms to the scheme that included changed benefits and higher average member contributions. Member contributions on average increased by 0.5% and have continued to rise since, now approaching 0.7% above the old scheme’s member contribution rates. The introduction of cost sharing in the new scheme is designed to manage future funding volatility. Costs associated with service before the new scheme was introduced should have been funded by employers in the past. These costs cannot be reduced by changing the scheme for current or future members. MYTH: The employer contribution rate in the LGPS is too high REALITY: There is not one employer contribution rate in the LGPS. There are over 7,000 participating employers in the scheme and each has their contribution set by the private sector actuary employed by the relevant one of the 100 funds in Great Britain. Current employer contribution rates range from 14% to 25% with an average of 18%. Given the level of past underfunding that remains to be contributed by many employers to the scheme this is a reasonable level. At the 2010 valuation the level may change because the future service cost has dropped as a result of the 2008 reforms but the legacy of past underfunding by employers remains in many, although not all, funds. MYTH: Local government pensions are paid directly by the taxpayer REALITY: The LGPS, like all private sector defined benefit schemes, is a funded scheme with real investments in UK and overseas business and tangible assets such as property all generating returns to the 101 funds that make up the Local Government Pension Scheme in the UK. The taxpayer funds a proportion of the employer contribution to the funds through local and national taxation. MYTH: The LGPS is only nominally funded REALITY: The LGPS has more than £100bn in real assets: property, investments in UK and overseas businesses, cash and government bonds. Four out of the largest 20 pension funds in the UK measured by asset level are Local Government Pension Funds [Hewitt 2010]. Total income to the scheme exceeds expenditure by £4-5bn every year [CLG 2009], even in the current climate of poor economic performance. Even in the depths of the recession LGPS investments provided nearly £3 billion for the LGPS in England alone, accounting for 27% of that scheme's income. Another factor contributing to the ongoing viability of the scheme to this is the increase in member contributions. Yield from employees increased by 15% in the last year as a result of the new contribution rates in the 2008 Scheme [CLG 2009]. MYTH: Scheme members retire on gold-plated pensions, protected for life REALITY: Around half of LGPS pensions in payment are below £3,000 a year [Audit Commission 2010]. The mean average pension is £4,033 with the average for women only £2,600 [CLG 2009]. As with any pension scheme member’s accrued rights, it was generally held that pensions already paid for were protected for life, however, the unilateral cut in the indexation of pensions from RPI to CPI has brought this into question for both public and private sector pensions. As a result of the Tory-Lib Dem budget LGPS members are likely to lose a quarter of the value of their pensions over the next 25 years pushing many more on to means tested benefits. MYTH: High earners in the LGPS receive unreasonably high pensions REALITY: In local government highly paid employees are in the same pension scheme as the workers near the minimum wage. In the private sector many company directors and senior managers set up their own exclusive defined benefit schemes on extremely generous terms while their employees have only a low value defined contribution scheme. The average accrued pension for a director in the private sector is £227,726pa, 56 times higher than the average LGPS pension [TUC PensionsWatch 2010]. Some members of the LGPS retire on very high pensions as a result of receiving very high salaries (236 local government employees earn more than £142,500pa), not as a result of an over-generous pension scheme. MYTH: Local government workers have a job for life and better pay than everyone else REALITY: The average length of membership in the pension scheme is only six years in stark contrast to the vision of a job for life. Existing jobs are often part time and low paid with minimal opportunity for overtime and other mechanisms common in the private sector to boost income. When comparing full time workers who are saving for retirement through an occupational pension scheme, public sector workers actually earn £22 per week less than their private sector comparators. The 'total reward figure', which is gross pay and employers' pension contributions, in the private sector is £666 and in the public sector is £644 per week [ONS 2010]. Local government pay is also low in the public sector context with two thirds of local government workers earning less than £21,000 a year. MYTH: To make pensions fair public sector provision must be reduced to the level common in the private sector REALITY: This would increase the number of older people forced to live in poverty which in turn will increase the cost to the taxpayer of state benefits, health and care services. It is never the right solution to inequality to stoop to the level of the lowest common denominator. In education the solution to problem of good schools and bad schools is not to worsen the good schools so all children are poorly educated. In pensions the solution is not to worsen the good schemes but to raise the standard of the inadequate schemes. In fact defined benefit pension provision in the private sector attracts a future service employer contribution of 15.6% [DWP Pension Trends] compared with less than 14% in the LGPS. MYTH: LGPS benefits need to be cut or member contributions increased because of deficits in the funds REALITY: The LGPS is estimated to be at least 75% funded with sufficient assets to pay all pensions due for the next 20 years without any further contributions [Audit Commission 2010]. Where deficits exist they relate to past service and underfunding by employers. One reason for current deficits is that LGPS funds were between 1990 and 1993 encouraged by the then Conservative government to fund only to 75% so the pension scheme could fund lower poll tax bills. Now deficits are measured against a 100% funding requirement, the cost of this historic underfunding is clear. Changes to benefits would only affect the future service cost which, as set out above, is already below the private sector average for defined benefit provision. MYTH: The current economic situation means member contributions to the LGPS need to be increased REALITY: Benefits already earned by members have to be paid, whatever changes are made to the scheme. There are no short term cost savings to be made from making radical benefit cuts. Increases to member contribution rates would not aid the Treasury’s finances unless the government introduced a specific tax on LGPS members (which would be contrary to their stated commitment to encourage pension saving). Instead any increase would be transferred into LGPS funds which have already been valued, without going through a valuation revision an increase in member contributions is unlikely to have any impact on employer contributions for at least three years. Members are currently subject to a three year pay freeze, without the protection for the lowest earners that exists in other parts of the public sector. Some members of the LGPS earn only 37p an hour above the minimum wage and many lower earning potential LGPS members opt out of the scheme on grounds of affordability. This trend is particularly common among part time workers (the vast majority of whom are women), in Greater Manchester, one of the larger funds, only 10% of full time staff opt out of the LGPS compared with 30% of part time staff. MYTH: LGPS members retire at 60 and get a pension for nothing REALITY: The normal retirement age in the LGPS is 65 and has been for many years. Members of the scheme contribute between 5.5% and 7.5% of earnings depending on salary, averaging over 6.4% overall. This is more than double the amount the average member of a defined contribution scheme contributes. MYTH: The new LGPS only affects new starters while existing members have their own preferential scheme REALITY: Reforms to the LGPS affected all contributing scheme members, existing and new. The LGPS is not a two tier scheme, the LGPS 2008 is the scheme for any one of the two million people working in LGPS covered employment whether they started ten years ago, ten minutes ago or are due to start tomorrow. Existing members sacrificed benefits and increased their contributions in order to keep the scheme sustainable. The LGPS is the largest pension scheme in the country with more than 1.7m contributing members, 1m deferred members and a further 1m pensioner members.

Picture of former Labour West Ham Councillor, Mayor, MP and founder of the GMB, Will Thorne on a fact finding mission to Revolutionary Russia in 1917.  Hat tip Tom and original link to GMB site here.