MoD group ballot circular 2 MoD/C/103/11Think back to your school days and it is a pretty safe assumption that not many, if any of us at all wanted to choose the civil service as a career choice. However we are now all civil servants and the one benefit that many of us joined the civil service for – a fair and equitable pension – is under threat of obliteration.
The government is planning to cut your pension. They want you to pay more, work longer and get less. Pensions are deferred pay, so you are effectively being asked to take a pay cut. We urge you to vote YES YES to defend your pension.
Latest proposals
The latest government pension proposals in a leaked Treasury paper are devastating. The paper confirms the government's intention to abandon the current civil service pension scheme. It wants to introduce a new "career average pay" scheme, giving civil servants massively less.
Not only will contributions increase by 3.3 percent, they are suggesting you would only get 1/100 of career average pay for every year in the civil service. This compares to the current scheme that gives you 1/60 of final pay (premium scheme), or 1/80 of final pay (classic scheme) plus a lump sum payment, depending on when you joined the scheme.
Younger civil servants would have to work until 68 for a pension worth less than half of their career average pay. Older civil servants would earn far less pension between now and retirement. The Treasury proposals would mean you losing even more than our union had previously thought. They show just how badly the government's plans will affect our futures.
RPI to CPI
The government have already introduced a change from RPI to CPI indexation of our pensions with no negotiation and in breach of their own manifesto commitments to protect accrued rights – a change which will cost existing and future pensioners many thousands of pounds.
The effect of moving from RPI to CPI indexation will be huge. The RPI is a higher inflation measure than the CPI - 0.8 per cent a year on average since 2000 – so future pension increases will be lower. A civil servant retiring now with a £10,000 pension will lose £35,000 or more over the average 25-year retirement.
Who do you believe?
The government says this may not be its final position. However, the talks between unions and government are three months old - and the proposals the government has now brought to the table are worse than anything we imagined. The government wants discussions to finish by the end of June.
Francis Maude, the Cabinet Office minister leading the talks has said, “it is a fact that people are living longer, which means that pensions are costing significantly more. We cannot expect other taxpayers to fund the increased costs of our pensions, particularly at a time when for many of them their pension benefits have been significantly reduced."
Ex-Labour cabinet minister John Hutton was appointed to head a commission into public sector pensions in June 2010. Lord Hutton's interim report was announced in early October 2010. His report rejected the myth that public service pensions are 'gold plated' and argued against 'a race to the bottom'
More importantly, Hutton’s report and last week a separate Commons public accounts committee report confirmed that the 2006 changes to public sector pensions are reducing costs now and in the future and that public sector pensions are sustainable and affordable now and in the future.
The National Audit Office have also confirmed recently that the cost of public sector pension schemes will fall as planned – from 1.9% of GDP now to 1.4% of GDP in 2060.
However, chancellor George Osborne explicitly told parliament that ‘from the perspective of filling the hole in the public finances, we will seek changes that deliver an additional £1.8bn of savings per year in the cost of public service pensions by 2014-15’." So public sector pensions are being cut not because they are unaffordable or unsustainable but because there's a hole in the public finances. That hole was caused by the banking crisis and the recession that resulted.
Probably the most telling comment is from Mervyn King, the governor of the Bank of England: “The price of this financial crisis is being borne by people who absolutely did not cause it. I’m surprised that the degree of public anger has not been greater than it has.”
The alternative
There is an alternative. The government should:
- Create jobs to boost the economy
- Invest in housing and transport
- Collect the £120 billion in tax evaded, avoided and uncollected every year.
The Ministry of Defence should:
- Civilianise the 40,000 non-deployable military personnel.
- Remove consultants, contractors or agency staff
- Examine contracts that charge ridiculous amounts for items or services
- Reduce external spending in our department – in March this year, MoD spent £517,412,567.93 in external spending.
Conclusion
All of this shows that it's more important than ever that we get an overwhelming YES YES vote and a very high turnout in our national ballot. This will support our union and the other unions who are balloting in our negotiations with the government. Now is the time to act to defend your pensions - Vote YES YES and urge your colleagues to do the same.
