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Imposition not negotiation
Historically changes in public service scheme
were, in the major schemes, made after consultation but there was
no formal recognition that changes should be negotiated.
In 2003 the last Government sought to impose a
major change on the Scheme – to raise the then established pension
age of 60 to 65 for all staff. This was resisted by a co-ordinated
trade union campaign and a new framework for dealing with changes
was agreed. It was established that changes would in future be
negotiated.
This framework produced negotiated
agreement in each of the schemes to deal with rising pension costs,
independently validated as having reduced the cost of schemes by
10%, and in the main schemes agreement on ‘cap and share’ cost
sharing arrangements which were accepted as having placed the
schemes on a sustainable basis.
Under ‘cap and share’ it was established that
if members got more benefits than was expected, e.g because they
lived longer or their pay rose faster than expected, then members
would bear all or most of the increased cost. Changes in
contributions or benefits to achieve this would be determined by
negotiation.
For its part the Government guaranteed to
maintain the current basis of costing pensions and to pick up the
cost of any change in the method of costing which it saw fit to
make.
It is evident that the Government wishes now
to by-pass this new framework and impose major changes rather than
to seek to negotiate change.
The move to impose lower pension increases and
higher contributions are clearly being pressed with a complete
disregard for established agreements, as to how change should be
managed. The Government/IPSPC proposals to raise normal pension age
and to switch to CARE could be advanced in the same manner.
The IPSPC has supported a modified cost
capping measure to be introduced but only after major changes have
been made which could not be justified within the current
framework.
This new mechanism which would mean any future
cost rise above a Government determined ceiling would be covered by
changes in member contributions and benefits agreed after
consultation, but with a default mechanism if agreement was not
reached.
However, costs would also be controlled
outside of this mechanism by any future increases in state
pension age (see 5. Raising the pension age).
