Superannuation Bill

Memorandum submitted by East Midlands Development Agency (SU 07)

1. This evidence is submitted in relation to the proposed changes outlined in the draft Superannuation Bill currently before Parliament. We are submitting evidence in our individual capacities but also as Board Members of the East Midlands Development Agency (emda):

Parvin Ali Opaal Agency Ltd

Haydn Biddle George Bateman & Son Ltd

Steve Brown North Midlands Construction Plc

Martin Bryant Former Director of Boots Plc

Ann Cartwright FCIPD Brooke McNee Ltd

Jon Collins Chair, Nottinghamshire Police

Elizabeth Donnelly Unite Executive Committee and Midlands TUC

Jim Harker Chartered Surveyor

Gary Hunt North Memorial Holmes Almshouses

Tricia Pedlar Strategic Spur Ltd

Michael Seals MBE NFSCO Ltd

Geoff Stevens Eldridges Matlock Ltd

2. Given the Government’s decision to abolish Regional Development Agencies (RDAs), and the fact that RDA staff are covered by the Civil Service Compensation Scheme (CSCS), the changes set out in the draft Bill are clearly of great relevance to our role in overseeing the closure of emda. The proposed changes are having the single most significant impact on emda staff and their ability to make life changing decisions about the timing and nature of their departure from the organisation.

3. The outstanding achievements of the agency (as confirmed by independent evaluation evidence and National Audit Office assessments) are inextricably linked to the performance and dedication of the staff. As Board Members, it is our responsibility to ensure that they are given the appropriate support and treated equitably and fairly.

4. As a private sector led Board, we clearly understand the need for reasonable, as opposed to excessive, settlements and therefore understand some of the key objectives of this Bill.

5. However, much has been made by Government Ministers of the fact that arrangements for the public sector need to be brought in line with best practice in the private sector. We believe that the Bill will have a range of significant consequences for many employees, particularly those over the age of 50 who will no longer be able to access their pension before retirement age and will inevitably find it harder to find employment. People will have substantially less time to make alternative arrangements in order to deal with a fundamental change to the terms upon which they were originally employed.

6. We have selected two examples of emda staff who are affected by these issues to help illustrate the above points: a 52 year old and a 50 year old, both with 33 years’ eligible service. Since joining the Scheme, these individuals had planned on the basis that under an early retirement scenario they would qualify for immediate access to their pension and a lump sum payment. The pension would be based on final pensionable earnings x reckonable salary / 80 and the lump sum is calculated at 3 x their pension value. Under the proposed revised arrangements, these two individuals would have no access to their pension until retirement (8 and 10 years respectively – under the Classic Scheme) and would qualify for a compulsory severance payment of 12 months maximum. As stated above, the proposed changes will have a significant impact on certain sections of the workforce, particularly those with less time available to them to make alternative arrangements and plan effectively for their future.

7. Once these issues are combined with the high degree of uncertainty around transition arrangements for RDAs, the result is an approach that, in our view, no respected private sector company would endorse and certainly does not represent best practice.

8. It is imperative that the potential outcomes delivered by the Bill on different individual circumstances (including the over 50’s, the longest serving and the lowest paid) are assessed against the Government’s own statutory equalities duties to ensure that individuals are not unfairly treated.

September 2010