Enterprise

Written evidence submitted by Fiona Apfelstedt (ENT 10)

Enterprise bill - Public sector exit payments - inclusion of payments to pension funds

To the Members of the Public Bills Committee, with regard to the Enterprise bill and clause concerning public exit payments and the inclusion of payments to pension funds.

I am writing to provide information to the committee in the terms of the public sector exit payments contained within the Enterprise bill with particular regard to the exit payment as defined in the act including actuarial payments to pension funds by the employer, where an employee is made redundant and because of their age, would be entitled under the pension scheme to access to an unreduced pension.

I am an employee in local government and have 37 years service.

I have read with interest the document provided by the government detailing the debate in the House of Lords in relation to the clause about public sector exit payments and I have to say that the examples given by the government to establish that middle ranking public sector employees will not be affected significantly by these exit payments, including pension strain payment is defective. Firstly they only give examples where the employee has 25 years service, whereas there will be a significant number with over 25 years service who will be proportionately disadvantaged, where the strain on the pension fund will be over £95,000. 

This is particularly the case if the employee is female as the strain on the fund is considerably more for women than men for the same length of service and salary because women are actuarially expected to live longer than their male counterpart, even though expected longevity for men and women is not dissimilar now that male death rates have reduced. Accordingly, this means that the inclusion of the £95,000 cap on exit payments that include payments to pension funds is discriminatory to women. For example a Director employed in local government earning twice the salary of a female employee with the same length of service will have the same strain on the pension fund exit payment over the £95,000 cap, thereby actuarially reducing the pension to both despite the disparity of salary and pension between the two. 

A middle ranking male employee with similar salary and length of service as a female employee will have a considerably smaller exit payment for the actuarial cost of taking his pension early, which would not be in excess of the cap. This means that women with long service will be discriminated against in comparison to their male colleague and as a result will receive a reduced pension. Bearing in mind the fact that the pension fund payment for the female is more than the male because the female is expected to live longer would mean that the female employee would be doubly affected, as the female would, if the actuarial advice is correct, have access to their reduced pension for a longer period of time as they would be expected to be  living longer.

 I note that the government have not carried out an Equality Impact Assessment in relation to this part of the bill because it did not affect business. However it will affect long serving female employees pensions in contrast to her male comparator. Please can you pursue the potential discriminatory consequences of the inclusion of pension strain payments in the exit payment calculation .I would be grateful if you could inform me how this unfairness and inequality to female staff can be addressed and if I can assist you in that regard or assist supplying more information please let me know.

February 2016

 

Prepared 10th February 2016