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CPS Axe Grinding on Pensions

Monday, February 4, 2013

"Bonkers" call by right-wing think tank to restart public sector pension negotiations based on new "costs" that do not exist says GMB.

Centre for Policy Studies are destroying their own credibility and are lining up in competition with the Taxpayers Alliance to win the 2013 "axe grinder of the year" award with this report says GMB.

GMB, the union for workers in public services, rebutted claims by the Centre for Policy Studies (CPS) on higher cost of public sector pensions and rejected calls for the current public service Pensions Bill to be scrapped and new negotiations started. See notes to editors for summary of the report.

Brian Strutton, GMB National Secretary, said “The CPS has got so excited about getting media to run yet another story attacking pensions that they have produced a shoddy report of made-up numbers and rather ludicrously called for the whole public sector pension reform program to be torn up and started again.

CPS are destroying their own credibility and are lining up in competition with the so called Taxpayers Alliance with an early entry to win the 2013 “axe grinder of the year award” with this report.

The three ‘new’ costs put forward simply do not exist:

Firstly, the CPS says the end of the state additional pension contracting out rebate will be a £3.4bn pension cost to the taxpayer – wrong, it is a tax not a pension cost and it benefits the taxpayer.

Secondly, the CPS says public sector employees will still get pensions as if contracted out at an additional cost of £4bn. Wrong, this is not an additional cost it is the same cost as before.

Thirdly, the CPS says there could be an extra £2bn cost if longevity has gone up faster than thought. Wrong, if there is an increase in longevity (and that is unknown) it will not be an additional cost but will be controlled by the cost cap imposed by government. So there is no ‘new’ cost at all. In fact the OBR says the reforms save the taxpayer 40% of pension costs.

The real purpose behind the CPS argument is to say the public service Pensions Bill, which implements the reform program negotiated between government and unions, should be scrapped and the process restarted. This is absolutely bonkers. Nobody in their right mind would sensibly advocate going through years of negotiations again and delaying reform even further.”

End

Contact: Brian Strutton, GMB National Secretary on 07860 606 137 or Phil McEvoy 0208 947 3131.  GMB Press Office 07921 289 880 07974 251 823

Notes to editors

CPS report summary

THE PUBLIC SERVICE PENSIONS BILL AND THE DWP’S WHITE PAPER by MICHAEL JOHNSON

This paper explains for the first time why the future cost of public service pensions could be more than £9 billion a year above current expectations.

This has primarily arisen because of the interaction – or “toxic tangle” – between two pension proposals currently before Parliament: the Public Service Pensions Bill and the DWP White Paper on the single-tier pension.

Together these have created two additional costs:

- about £3.4 billion a year due to the loss of the public sector employers’ NICs rebate following the end of contracting out; and,

- about £4 billion a year as a result of public sector employees continuing to enjoy an enhanced occupational pension, as if still contracted-out, whilst being entitled to further accruals within the new single-tier state pension, once it appears.

In contrast, private sector employers who are today contracted out will be permitted to change their scheme rules (and reduce the pensions paid) without trustee consent (not least to enable them to recoup their lost NICs rebates).

A further £2 billion a year in additional cost may well arise as Lord Hutton’s modelling used life expectancy rates that are now six years out of date.

The Public Service Pensions Bill should therefore be stopped in its tracks until the White Paper’s cost implications for it are thoroughly examined. This should include the use of up-to-date projections for life expectancy.

It was already widely accepted that public sector employees already enjoy pensions which are far more generous and secure than the great majority of private sector employees. These new findings show that the sustainability of the post-Hutton pension settlement is even more questionable thanpreviously thought.

The need for bolder reform of public sector pensions is far greater than that proposed in the Public Service Pensions Bill.

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