Superannuation Bill

Memorandum submitted by the Hay Group (SU 34)

In conjunction with our verbal evidence on 14th September we are pleased to set out brief comments on the Bill.

General remarks

We believe that there are number of positives to note about the Bill.

Firstly, and most importantly, the Bill should ensure that the payback period for Civil Service redundancies is relatively short which will be beneficial for the public finances.

Secondly, it avoids a huge disconnect between redundancy payments to individuals with long and short service. This is fairer and means that it is affordable to make long-servers redundant where appropriate.

Thirdly, the maximum payments are no longer so generous that redundancy looks like an extremely desirable option financially to long-servers.

Finally, we were pleased to see that the Bill allows for the cost of pension enhancements. As such costs are transparent and there is no implicit discrimination in favour of older workers.

We do however have some concerns and questions, as follows.

· The population affected by the Bill is relatively small in the context of the total public sector workforce. In the interests of fairness and the wider need to control public spending, we would expect to see similar moves in other parts of the public sector.

· Much depends on how the provisions are used and practice, and announcements so far have concentrated on using natural wastage and voluntary redundancy to reduce the size of the workforce. Any workforce reduction programme needs to be underpinned by a robust understanding of current and future manpower requirements and a clear view of current capability and performance. Otherwise there is a risk of losing the best performers and or ending up with a civil service that is the wrong "shape". We have a particular concern about the risk of losing specialists who are most likely to be able to find work elsewhere but who it would be hard to replace.

The relationship between the public and private sectors

In general the level and value of redundancy payments in the private sector has been in decline. The median redundancy payment is 3 weeks of pay per year of service. However over 30% of private sector organisations have policies based on statutory redundancy terms, albeit typically without the £380 per week cap on salary or the 20 years’ service limit.

September 2010