Superannuation Bill

Memorandum submitted by Julie Hume (SU 48)

Summary

1. This submission contains evidence regarding the implications of the Superannuation Bill 2010/11 on a 52 Year Old Civil Servant with 34 years of service. It makes the point that the imposition of this Bill clearly raises the question of denying equity of treatment under human rights for those individuals caught up by redundancy in the period of the Bill, should it obtain Royal Assent. Effectively, it would place a cap on existing entitled terms under the Principal Civil Service Pension Scheme (PCSPS) in the event of redundancy. It would bring about an artificial and temporary amendment to that Scheme through the Bill under which there will be no scope for arbitration or negotiation of amended redundancy/pension terms. I would be amongst the large number of individuals likely to come under redundancy arrangements during the window within which the Bill might operate. Consequently, if I were to be subject to the proposed Bill terms, I would be treated inequitably and greatly disadvantaged, over like civil servants of same age/tenure of office who have either previously exited under existing redundancy terms or who may do under a future permanent amended Scheme.

Comments

2. I am 52 years old and am a DfT citizen in the Government Office Network, situated in Government Office for the North East (GONE). I joined the civil service in 1976 and have over the years, amongst others, undertaken functions including monitoring performance of former Training and Enterprise Councils, export and services delivery for UKTI, Planning Casework and Ministerial Business support, as well as establishing and delivery of National Transport Casework functions.

3. This July the Secretary of State for CLG announced ‘in principle’ the abolition of the Government Office (GO) Network. A formal decision on closure is anticipated at the outcome of the Spending Review and which, along with the impending proposals to implement the Superannuation Bill, will have serious implications for GO staff in respect of both their career prospects and redundancy entitlements.

4. In addition, with the current economic position and jobs market in the North East and its’ heavy depende ncy on the public sector, where around a third of working people are employed in the public sector, finding alternative employment will be very difficult. R edeployment opportunities for GONE civil servants elsewhere in the region are likely to be extremely limited, as other Government Department sites in the region too look to contract and make resource savings through redundancies and by absorbing staff surpluses to fill vacancies internally. Whilst there has been some suggestion of repatriating GO staff back to their parent Department, in reality such opportunities are unlikely to exist for these reasons, even where there is another Departmental presence in the region. These conditions are likely to continue for the short to medium term at least and certainly during the anticipated period of force of the proposed Bill.

5. There is, therefore, a very significant risk of my being made compulsory redundant during the operational period of the Bill, if it obtains Royal Assent.

The Principal Civil Service Compensation Scheme (PCSCS)

6. A central issue for me has been the understanding which both I, as employee, and I believe Government, as employer, have had about the entitlements I would have in the event of redundancy. Throughout my employment I have contributed to the PCSCS, based on the terms and conditions that I entered into when I joined the Service some 34 years ago. In October 2002 when three new, ‘classic’, ‘classic plus’ and ‘premium’ schemes were introduced, the document ‘Pension Choices’ clearly identified those entitlements. The extract of that document (pages 36 – 41 book form) entitled ‘What happens if I am made redundant –‘ specifies the details, and provides worked examples, of those particular terms. In my particular case, page 38 ‘I am aged between 50 and 60’ makes clear the redundancy package I will receive. Those particular entitlements were, amongst others, those upon which individuals were asked to make an informed decision about their pension choice and I, as with others, were subsequently able to make other responsible financial planning decisions based upon the clear knowledge of our compensatory package entitlements should we face redundancy.

7. In the light of this, I do not consider if fair, just or transparent that a proposed cap on the limits of the Scheme, in other words an amendment to its current entitlements, should be brought about by the proposed Bill. Whilst I understand that the Bill is promoted as a temporary arrangement, with a sunset clause and the opportunity for its repeal at any time during its term, none of this will afford equity of treatment to any individual subject of agreed voluntary or compulsory redundancy after its coming to force with any like civil servant of same age, years of service etc, who departed under redundancy either prior to the Bill coming about or when it might in future be replaced by any permanent, amended, Scheme terms. Individuals in GOs will have limited, if any, choice of timing of their redundancy if by dint that should fall within the temporary terms of the proposed Bill.

8. On a personal level, the Bill will impose changes which will amount to a reduction of two thirds of my existing entitlement, both in reducing my pension lump sum and removing an Annual Compensation payment, by way of access to an early unreduced pension, which I had understandably factored into my future financial planning and for which I cannot now make any retrospective provision to restore. At age 52, I consider it unlikely that I might obtain a job within either the private or public sector as a ‘first choice’ of an employer in a highly competitive labour market over the coming years.

9. Effectively, this means I will become a dependant of my partner, with no means of personal annual income because on the removal of my current compensation terms. Whilst equitable of age, tenure of service, and on a higher salary now than my partner, a civil servant who left under redundancy within the last year, I would be unable to contribute financially with him on equitable terms due to the Bill terms. That I have been a 34-years standing civil servant who has understood the terms under which they would be entitled at redundancy, at the very least, militates that it would be fairer to introduce any changed proposals over a transitional (grace) period, say of a couple of years as has applied elsewhere in other public sector scheme changes, rather than with the ‘cliff edge’ of their immediate effect.

10. In conclusion, I consider the [temporary] Bill would be inequitable to me because –

· If, as is likely, I am made redundant during the period of the proposed Bill, my redundancy terms will be inequitable with those civil servants of like age and period of service, who have left immediately prior to the Bill and, likely, after its repeal or cessation;

· Being over 50, I am no longer afforded the Annual Compensation Payment which my current entitlement provides me with and upon which annual income my future financial planning, from the time I entered the service, relied upon. I consider this age discriminatory, given that such entitlement to reduced pension, from age of 50, was identified to be my accrued right;

· The absence of redeployment opportunities in the event of redundancy, means that my existing entitlement to an Annual Compensation Payment (access to unreduced early retirement) is a critical income of which I would by the Bill now to be denied; and

· Absence of appropriate notice of prospective changes to the PCSPS of the magnitude proposed by the Bill, renders it impossible for me to restore and have access to, by another pensionable means, the compensatory entitlements which I have accrued over very many years.

11. This clearly means such individuals who come under redundancy arrangements during the period of force of the Bill would be unfairly and greatly disadvantaged.

September 2010