Belfast Telegraph

Public sector pensions Bill fans the flames of dissent

Unions bid to halt changes that will affect thousands

BY NOEL MCADAM

Public sector workers have reacted with fury after pension changes making a third of Northern Ireland's employees work longer for less money passed their first stage in the Assembly.

Finance Minister Simon Hamilton (below) was accused of "shredding the contracts" of hundreds of thousands of staff across the Civil Service, education, hospitals and emergency services.

He was called a "ventriloquist's doll" to Chancellor George Osborne whose Autumn Statement announced the national changes which mean a new State pension age of 68.

Now the main Civil Service union Nipsa and NI committee of the umbrella Irish Congress of Trade Unions hope to persuade enough MLAs to vote against the legislation at its next stage in the Assembly later this month.

The Treasury has warned the Stormont Executive it will cut upwards of £262m from the block grant this year unless the changes are implemented here, and even Sinn Fein said it accepted that parity with the UK – the principle that the same rules apply in all regions – could not be breached in this case.

Bumper Graham, of the Nipsa, which represents the largest single group of civil servants affected, accused Mr Hamilton of "shredding" the contracts of thousands of workers.

"What is the point of devolution if all Simon Hamilton amounts to is a ventriloquist's doll for George Osborne," the top trade unionist said.

"Mr Hamilton has let down thousands of civil servants who had expected to retire at 60 or 65 and who will now have to work until 68 or even longer.

"This is the minister who is always on about economic appraisals, yet there has been no assessment of the impact of this in Northern Ireland despite repeatedly asking for it.

"It will probably end up costing more than they think it will save.

"For one thing, if you keep someone in a job until they are 68 or older you are blocking that job for a younger person or graduate.

"And studies have shown that people forced to work longer are more likely to suffer from ill-health.

"So, it is likely to cost the health service more and the most expensive part of pensions is those paid out in terms of people with ill-health."

Mr Graham said his union had also asked for a proper assessment of the Treasury's threat to cut Northern Ireland's block grant – and hit out at the number of MLAs present during the lengthy two-part debate.

"The Assembly is always quick to criticise Civil Service absenteeism and yet for most of what I saw of the debate a quarter of our MLAs were missing, without any explanation. Certainly more than 20 MLAs were not there," he added.

Mr Hamilton hit back: "My role as Finance Minister is to ensure that public expenditure is properly managed. I totally refute the allegation that I have been shredding the contracts of our public service workers.

"In fact, I am ensuring that public service pensions are sustainable for the future and protecting the rights of workers to continue to have public service pensions.

"Pensions already accrued are fully protected and there are also generous transitional protections for current members.

"People are living longer and so the burden on taxpayers to fund the payment of pensions for more years than originally anticipated means that we need to reform our pension schemes."

The DUP minister said the Executive agreed in March 2012 to implement the reforms consistent with equivalent public service schemes in Great Britain, and the Treasury had made it clear that failure to implement reforms will result in a financial penalty of up to £300m for each year of delay.

Stormont is bowing to the inevitable, writes John Simpson

Saving for retirement takes several forms. All employees earn a pension through National Insurance contributions paid whilst in employment. This is the normal old age pension scheme.

In addition, most employees in the public sector and a small proportion of private sector employees are also enrolled for an occupational pension.

Particular arrangements vary but occupational pensions have, until recently, usually been of the defined benefit character, which meant that the employee became entitled to a pension calculated on the number of years they had paid into the pension fund linked to a fraction of the average salary in their last years of employment. With additional lump sum allowances, defined benefit pensions of 50% or more of final salary have been possible.

This type of pension scheme has become more and more expensive to employers, as pensioners have a much longer life expectancy, and money paid into pension funds has been much less able to earn the rates of return needed.

In short, to survive existing defined benefit schemes would need to increase substantially the monthly payroll deduction for each employee and seek a much larger employer contribution. Across the private sector, where schemes of this type have existed, many have closed and others have amended the scale of pension benefits to match tighter financial constraints.

The public sector pensions' arrangements have become unacceptably expensive to the Government, which has amended many of the various schemes to ensure that the level of pension payments is closer to the funds available.

Critically, most public sector pensions will be calculated, not on final salary but on a measure of average earnings over a longer period. People will work to a later retirement age.

In Northern Ireland the Executive has acknowledged the inevitable and is amending public sector pensions' broadly in line with GB. The amended arrangements will mean that, subject to whatever phasing-in arrangements are approved, tomorrow's pensioners will have smaller pensions than today's.

In a low-growth economy with modest returns on investments and a longer-living population, the Government is only behaving rationally by reducing the cost of public sector pensions.

'This is just insane'... three workers' views

TEACHER

Stephen McCord (40), from Doagh, Co, Antrim, is head of the science department at Glastry College, Co Down.

"I've been teaching for 19 years and would be on a salary of around £40,000.

"I've been paying into my occupational pension since I started, which as it stands now, it would give me a pension roughly about half of my final salary when I reached the age of 60.

"If the bill is passed, then I will be looking at not getting my pension until the age of 67, and that's extremely worrying. I'm already required to pay more now and it looks like we also wait longer for a smaller pension than what we had expected.

"My wife Estelle is a teacher as well; she's on a career break and hopefully will return to teaching some day, but that means both our pensions and our retirement income would be affected.

"After four years of study I opted to go into teaching and take a lower salary than what I could have got in the private sector, knowing that there was a good pension scheme.

"What we are looking at here will be an ageing workforce being expected to cope with what is already a difficult job with increasing pressures."

NURSE

Kathyrn Gault (45), from Enniskillen, works full-time, as a nurse at the South West Acute Hospital and at the Royal College of Nursing

"At the moment, my pension scheme retirement age is 60 and if this bill is passed then it will be increased to 67 for me.

"I have a long-term health condition, and taking that into account along with the nature of the job, on the balance of probabilities it's unlikely I will be working until the age of 67.

"I have been nursing since 1987 and have been paying into a pension all that time.

"But I left the NHS to work in a private nursing home in order to get a permanent job, so I paid into a private pension for these years. This had to be frozen once I returned to the NHS pension scheme in 2002. So I have a gap in my pensions contributions and that really concerns me as well.

"I was always told that the NHS pension scheme was one of the best to be in and that a private pension scheme was better than none.

"I think this Bill is insane. I can't really contemplate anyone nursing in today's environment to that age. It's a much more physically and emotionally demanding job."

CIVIL SERVANT

Danny Lowry (29), from Belfast, is an admin manager in the benefits appeals section of the Department for Social Development

"This proposed change is ludicrous – it means that my colleagues and I will be paying in more money for a lesser outcome.

"I won't be able to get my pension until I'm aged 67 or 68, and I really have no confidence that there won't be further changes by the time I get to that age.

"My EO2 grade gives me a salary of £21,250 and I've been paying into the Classic Plus pension scheme. It had been based on a final salary pension, which would have given me a pension at half salary, but now it's based on a career average, which is not so beneficial.

"I'm sure that my pension contributions have doubled in the time I've been working, as I've got two promotions in the last 10 years and actually got my salary made up within the first year of starting, as it didn't reflect the minimum wage.

"This Bill will also impact on youth unemployment, as there won't be the necessary movement to allow for taking on new staff and there won't be the turnover of retiring staff to allow other staff to be promoted, giving them better salaries."

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