V is for Victory

With futures at stake, the fight to secure the right pension deal for members was one of the most important the CSP has taken on.

With futures at stake, the fight to secure the right pension deal for members was one of the most important the CSP has taken on. Few public sector issues in recent years have raised such a storm as plans to reform one of the world's biggest occupational pension schemes. Hence the satisfaction felt across the CSP by those involved in a lengthy battle to secure what the Society recognises as a great victory for members. Lesley Mercer, CSP director of employment relations, says: 'The CSP has invested significant resources in these negotiations over the past four years, so it is great that we have been able to achieve a positive outcome for members, especially given what has been happening to pension schemes outside the NHS. The input from members of the CSP industrial relations committee has been invaluable in the whole process, as has the help from the TUC.' In 2003, the government launched a major review of the NHS pension scheme as part of a move to look at public sector pension provision throughout the UK. It was hailed by ministers as an opportunity to bring the scheme up to date, making it more flexible and appropriate for the workforce. But the government's intention to raise the normal pension age in the public sector from 60 to 65 sparked grave concern among unions. From the start, the CSP adopted a firm stand to protect members' interests, waging a campaign that involved many of the Society's functions and thousands of members across the profession. There were a number of areas to tackle. Plans to raise the normal pension age with what seemed limited protection for existing members were causing alarm. And there was also the prospect of future pensions being based on career average earnings rather than final salary. ALL HANDS ON BOARD The Society made sure it was involved from the start of the review process (initially led by the NHS Confederation). It had a seat on the pension review steering group, which included, as well as unions, representatives from NHS trusts and the Department of Health. The CSP also set up its own pensions working group, a sub group of the industrial relations committee, to scrutinise the process and see through negotiating objectives. The Society's negotiating priorities were clear. It aimed to keep a normal pension age of 60 for existing members with no loss of pension; retain a final salary scheme; keep the option to retire at 55 for members with special rights, and have equal survivor benefits extended to same sex and unmarried partners. In addition, the CSP sought to build greater flexibility and choice into the scheme to reflect different working patterns. From early on, CSP officers played a leading role in discussions on the review. In February 2004, Ms Mercer, who was then the CSP's assistant director of employment relations, raised key concerns directly with then chancellor Gordon Brown at a meeting of the TUC general council. This led in May 2004 to a CSP meeting with Paul Boateng, then chief secretary to the Treasury, and his officials to argue the case for preserving the rights of members with special rights to retire at 55. Ms Mercer and industrial relations committee member Ruth Jones attended the meeting. MEMBERS SPEAK Members got a chance to air their views when a three-month consultation on the review proposals began in January 2005. The joint position of the NHS trade unions was that the proposals fell significantly short of members' aspirations. CSP stewards organised 240 local workplace meetings in February and March 2005, giving thousands of members the chance to discuss issues and give feedback. The result was one of the biggest consultations by any union, with a quarter of the Society's NHS membership taking part in meetings. This is regarded as a huge success. Elsewhere, trade unions organised concerted lobbying and CSP members met MPs to make clear the Society's concerns over the reform plans. Frontline reported regularly on developments, which were also covered in Stewards News and the CSP website via a special pensions page inviting emailed comments. Members turned out in force on 18 February to support a TUC public sector pensions campaign day. Pressure continued to mount on the government to change track. Alex MacKenzie, current chair of the industrial relations committee, recalls: 'It was coming up to the 2005 general election and the public sector unions worked together to say what they regarded as unacceptable. We did run quite a big campaign and the process was halted.' BREAKTHROUGH IN SIGHT It fell to Alan Johnson, government minister, to announce a 'fresh start' and launch a new basis for discussions while denying a government u-turn. At a ministerial pensions summit, brokered by the TUC, it was agreed that, after the general election, there should be new meetings to discuss general principles behind pension reform and a new process for negotiations. 'I think this showed the importance of a united front by the unions,' says Warren Glover, CSP research and policy officer, employment relations and union services. In the following months, the CSP and fellow trade unions stuck to their priorities in negotiations with government and secured a breakthrough. In October 2005, a framework agreement was reached on public service pensions protecting the right of current employees to retire at their current normal pension age with no loss of benefits. Hailing the deal at the time, Ms Mercer said it met the Society's 'number one negotiating priority'. CSP senior negotiating officer Janice Collins led subsequent negotiations on the design of a new pension scheme, with the Society pressing to improve benefits as far as possible. In the autumn of 2006, it consulted members on the revised pension scheme proposals. The majority of members backed the changes, approving retention of a final salary scheme as well as the introduction of partner pensions into the current scheme. In January 2007, the CSP submitted a formal response to the consultation document reviewing the feedback from members and endorsing the proposals. WORKING IN UNION Details of the new pension scheme were formally announced in September last year, coming into effect on 1 April 2008. Ms MacKenzie says the end result is an 'exceptionally well-negotiated agreement'. She sees it as a product of hard work by different parts of the CSP, including employment relations and union services, communications and marketing, the industrial relations committee, stewards and members. 'It is one of the many things the staff in the Society work on and I think it needs to be recognised that this is the kind of thing that can be achieved.' She adds: 'Moving from getting the original idea withdrawn to producing what we've got now is definitely testament to the trade unions working well together. I think it's a classic example of where working together produces good results.' Ms Collins agrees: 'We managed to change the initial proposal. If you judge that in the context of what's happening to pension schemes in wider society, where final salary schemes are just not an option any more, that's a big positive development.' Persistence and TUC colleagues taking a strong lead were key to securing the agreement, she suggests. 'The stewards did a good job consulting the members, and members themselves put in a lot of hard work, making it clear they found many of the original proposals unacceptable. The CSP and elected representatives invested a lot of time in this. 'Member support has been invaluable and we've shown a united front. We had clear negotiating objectives, and we were able to achieve them.' She's right, and all those involved in the landmark agreement should be proud. FL

Pension benefits

The new pension scheme arrangements take effect from 1 April 2008. Anyone joining before that date will join the existing scheme. Existing scheme members' benefits will include:
  • keeping a normal pension age of 60 (or 55 for staff with special rights)
  • keeping a pension of a 1/80th of final salary (based on the best of last three years' pensionable pay) plus a tax free lump sum of three times the pension
  • a new option to take a larger lump sum, up to 25 per cent of the value of the pension, in return for a smaller pension
  • survivor pensions extended to qualifying unmarried partners, in addition to widows, widowers and civil partners (for service from 1988)
  • being able to continue paying into the pension beyond the current normal pension age and build up the pension up to a total of 45 years regardless of age of retirement
  • a one-off choice to move to the new scheme
Staff joining the NHS on or after 1 April 2008 will join the new scheme. New scheme members' benefits will include:
  • l a normal pension age of 65 and the right to take a pension after the age of 55
  • l a final salary pension with a 1/60th accrual rate for each year of service based on the average of the best three consecutive years of membership in the 10 years before retirement, increased by retail prices index (allowing staff to take a lower paid job in the run-up to retirement but have their salary calculated on the higher salary they had before stepping down)
  • l the choice between converting up to 25 per cent of the pension into a lump sum, foregoing a lump sum in favour of a larger annual pension or staff can choose anything in between the two options
  • l a more flexible pension with the ability to take all or part of the pension while continuing to work and build up more pension
Other additional benefits to both existing and new schemes include extending survivor pensions for children up to the age of 23 and giving everyone short-term death in service benefit for six months. Most staff will pay an additional 0.5 per cent on their contribution rate, which will have been seen in pay packets in April. The lowest paid NHS staff will pay a contribution rate slightly below the current rate, while the highest paid staff will pay an additional 1.5 to 2.5 per cent on their contribution rate. More detailed information can be downloaded at www.nhspa.gov.uk

Countdown to success

April 2003 NHS pension scheme review begins September 2003 TUC confirms opposition to the increase in the normal pension age to 65 and kick-starts joint union campaigning on public sector pensions 19 June 2004 TUC rally on threat to pensions 16 November 2004 lobby of parliament January 2005 launch of consultation on review proposals 18 February 2005 TUC's public sector pensions campaign day March 2005 government announces fresh start on pension talks 5 May 2005 general election 18 October 2005 breakthrough framework agreement reached 23 November 2006 industrial relations committee working group endorses new pension proposals 21 September 2007 new scheme details announced 1 April 2008 new scheme comes into effect
Matthew Limb

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