Boris and his Pension Merger Plan to Rescue GB Plc

On Monday the FT rather oddly announced that the new Chair of the London Pension Fund Authority (LPFA), Edmund Truell, with the support of Mayor Boris Johnson, is to merge all 34 London Staff Council funds "into a single scheme and channel more investment into the capital’s infrastructure projects".  The Evening Standard also waded in on Tuesday in a similar vein here

The fact that neither Boris nor the LPFA has any legal powers to do this was not mentioned.

Now it makes perfect sense to look into merger in order to see if it will save money and stop Councils and pension scheme members being ripped off by vested interests. Equally, no one would be more happier than me if we could use pension funds to kick start the economy and say build more homes.

But there is a problem. Some 4.6 million Brits have a local government pension entitlement. Its primary purpose is to pay an income in retirement and not to be a substitute for inadequate investment in infrastructure by Government.

Some people also think that the LPFA is looking at merger due to its own internal financial predicament as a mature scheme with many pensioners claiming their money but relatively few active members still paying into the scheme.

There has also been claims of scaremongering. The Local Government Pension Scheme as a whole has assets of £160 billion. It is not broke. Some schemes do indeed have difficulties but in many cases this is due to outdated and irrelevant accounting measures which price scheme liabilities on the current abnormal 200 year low in gilt yields.

So far there has also been no mention either that in the new LGPS 2014 scheme members (and their "widows & orphans") will face the future costs of poor investment performance.  Under European and UK law pension funds must be run in the interests of beneficiaries, then the case for or against merger or for investment in any particular asset class, must first and foremost take into account their interests. Not short term political ambitions for a flat in Number 10.

There are a number of obvious risks. What if merged Council pension funds invest in building homes for rent and there is a property price crash? What if investment in alternative electricity supply is undermined by a change in future Government policy? In other countries pension funds that invest in infrastructure get significant Government financial support or guarantees.

There is also the issue of "why only the LGPS?". While it may seem rather strange that there are 101 separate LGPS schemes worth £160 billion, there are about 53,000 private Pensions schemes. The vast majority of whom are tiny. How well managed are they? This is also important to GB Plc since the Private sector defined benefit schemes alone have £1.1 trillion in investments. Surely it makes sense to look at merging private sector schemes as well?

The Secretary of State, Eric Pickles, who the FT claims is a supporter of Council Pensions merger, may have the legal power to force merger.But unless this is done sensitively and by putting the interests of beneficiaries first, then it is likely to end in tears. Which if the supporters of merger are right, would indeed be bad news not only for the LGPS but also for GB Plc.

Social Housing Pension Scheme guide and Seminar

UNISON and the other unions may have achieved success with the Local Government & NHS pensions but the battle continues in the Community and private sector.

UNISON pensions experts have issued a guide to protecting the Social Housing Pension Fund (Pensions Trust).  There is likely to be a major industrial dispute over plans by some employers to close their SHPS schemes.  This is totally unnecessary.

It is also running a seminar on November 15 at the UNISON centre in London.

All branches with Community members should have been invited to send delegates. It is imperative that they attend.

Outsourcing & Austerity: Civil Society & the Coalition Government"

Today I was a breakout session speaker at this conference in Congress House. I spoke alongside senior employment rights officer at the TUC, Hannah Reed. Our brief was "What is happening to the voluntary sector workforce".

I will post another time on the wider conference (which was very well organised). Below is my crib sheet for my session. I believe that notes taken of the whole conference will be published on line. Will update when get details.

"Overview
Austerity & Outsourcing affects not only clients & users but also staff. There has been a “Race to the Gutter”. Cuts in SP funding and removal of ring fencing. Deliberately breaking and undermining of TUPE.

Means that many staff have had pay cut by up to 30%, increase in working week, cutting of leave, threat of redundancy and job insecurity.

Growth of agency workers/temporary contracts; bank/0 hour’s staff; tax cheating bogus self employment, greater use of “volunteers”.

Redundancies and recruitment freezes means increased case loads & greater workplace demands which leads to stress and the cutting of corners in providing services. 

We all know what happens when organisations serving vulnerable groups start cutting corners to cut costs.

There is a huge reputational risk to organisations and a potential discrediting of whole sector. Some organisations want to employ only part time workers not full time so they can claim state benefit top ups!

Wider content is the attack on employment protection for workers by the Coalition. The doubling of the time needed before you can claim unfair dismissal, charging upfront fees of over £1000 for ET, withdrawal of health and safety measures etc.

Need to understand why workers pay and conditions are relevant to the wider community, due to the local economic impact and that on the quality of service. Many experienced and trained care workers can get more money packing shelves in Tesco’s.

What we need to do?
All Unions want genuine Partnership with employers and Community groups/representative organisations. Discussions around sectorial agreements on quality, safeguarding and price. We want to work with like minded people who will say enough is enough – we cannot go below this level and provide decent services. Not just Trade union provider interest but we are citizens as well who rely on these services.

 

Workers and community activists can work together (both got inside knowledge, local campaigns).  Top and bottom approach.

Unions recognise that we have to get our act together as well. Never organised properly in the sector in past. UNISON now has a specific section for all Community & Voluntary. I am one of two elected NEC members. Setting up local branches specifically for C&V trade union members.

 

Trade union recognition. Need to get members to join. Cannot understand why some "reputable" organisations refuse to recognise trade unions? A blockage to working together. What have they got to hide?

Campaign/lobby together (openly or otherwise) the Government, Councils and Devolved nations. Especially Labour & progressive "one nation" elements (discuss). The unions don't yet punch their weight in our sector.

 

Finally

While there is a lot we can do change policies and occasional defeat the Coalition. (such as water down Health Bill and new look pensions LGPS 2014). There has to be bigger political issue. Educate our members and public that there is a credible alternative economic model to Austerity.  We need a plan B.

Increasing the pay of the low paid is one way of increasing demand and growth. While huge amounts of taxpayers’ money is being used not to pay off debt but subsidise poverty wages. 

 

We have a job of work to do with our members and public on this vital subject.

Lab12: Workplace pension fringe

This fringe by NAPF/Smith Institute was on Monday. Gregg McClymont MP, pension shadow minister is speaking. Monday (1 October) was of course the day that Workplace Pensions began. So it was pension wise, a special and even historic day.

The Labour position outlined by Gregg is encouraging. He wants full transparency on charges. He wants to encourage scale. There are nearly 50k pension schemes in the UK. Pensions should not be a "cottage industry".  Policy now is for member Trustees for all pension funds (including those run by insurance companies) and changes in fiduciary duties.

NAPF CEO Joanne Segars spoke next about how it is interesting that pensions are being reported for the first time in a largely positive way. By Christmas 500k extra people will be saving for their pensions. Their research is that 2/3rd of people will not opt out. She agreed with Gregg about scale and also the need to have a better alignment of interests between savers and pension providers.

 

My question was that one of the reasons why there has been a low take up of pensions so far is that people are not stupid, they realise that the products currently offered are often pretty rubbish and that they do not want to take all the defined contribution (DC) investment risk.  I wondered if the new look Local Government Pension Scheme 2014 could not be a model for a rebirth of sustainable and affordable defined benefit schemes in the private sector?

 

Gregg thought the idea was interesting while Joanne reminded everyone that many defined benefit schemes were in serious difficulties.

 

This was the first of four pension fringes I attended this conference. One was under Chatham House rules so I can't post on it which is a great shame but I will do the others (eventually).

TUC 2012: The State of the Unions

I'm in Brighton for the Trades Union Congress 2012 as an UNISON delegate. Conference starts at 4pm. Stacks of reports, motions and policy papers to wade my way through.

While on the crowded train here I tapped some strictly personal thoughts into my BlackBerry about "the state we're in".

First the bad news. Not a good start last week to hear that total trade union membership has dropped under 6 million for the first time. A long way from the 1970's 12 million.

Recession and austerity will mean that membership may (will) decline further. The public sector is shrinking and many new jobs in the private sector are so far either in non unionised sectors or self employment (real or bogus).

There are various attempts to even further restrict trade union rights such as threats to get rid of facility time and demands for minimum turnout in strike ballots.

I'm trying desperately to think of any good news. Nope, can't think of any. "Good" is not the right word but there is still hope and there is still the potential ability to turn negatives into positives.

Lets not forget that we are still by any measure the largest mass membership organisation in the UK.

The need for unions are as compelling now as they have ever been. Power at work is stacked in favour of the employer. The simple fact of the matter is that you cannot trust the government, the law or your employer (no matter how well meaning) to protect you at work, only your trade union.  Without a collective counter balance at work even the "best" employer will have nothing to stop them going amok from time to time.

Ironically it is this horrible and cruel government which could be our unlikely recruiting sergeant. There has always been is a strange belief that unions are not really needed because if the boss misbehaved you can take them to the cleaners at the courts. This has always been rubbish but the wholesale assault and ripping up by the Tory led Government on workers legal rights and protection must surely be acting as a wake up call? Are you going to be able to pay a upfront court fee of £1500 to try and get justice if you are unfairly thrown out of work?

The unions also need to start thinking out of the box about making us appear attractive to workers in small companies and the self employed. Many members of my family are in this position. They don't need representation or collective bargaining but they are worried about what will happen if they fall ill or how much money will they get when they retire. Trade unions in other countries provided income protection if sick why can't we? Why can't UK unions provide pensions? Why not offer a national Defined Benefit pension scheme modelled on the new look Local Government Pension Scheme 2014?

Finally, it seems likely that this government will last until 2015. So we have less than 3 years to use our influence in the Labour Party to help it become the next Government on the back of policies that will really benefit working people. Money alone is not enough. We need to get active within the Party and use our relatively privileged position within the Party to argue for change.

In the meanwhile let's do our bit educating our members and the public about the alternatives to this  governments rotten economic policies and get a mass turnout on October 20th as part of a wider Labour movement renaissance. Hopefully next years state of the unions will indeed have some "good news". 

"UCATT Members Vote to Accept Local Government Pension Offer"

Ucatt members (Union of Construction, Allied Trades & Technicians) have also voted overwhelmingly to accept the new local government pensions scheme by 79%.

They join GMB members who voted 95% in favour, UNISON 90% in favour and Unite 84% in favour.

Seems pretty clear result. Now we need to be encouraging people to join the new scheme and using it as a model for schemes in the private sector.  Hat tip Unionreps e-newsletter.

GMB vote 95% in favour of LGPS: Further Misery for Miserablists

GMB member's of the Local Government Pension Scheme have voted by 95% in a secret postal ballot to support the new look scheme.

"Brian Strutton, GMB Public Services National Secretary, said “GMB members have spoken loud and clear.  The new LGPS 2014 proposals represent a fair and balanced outcome which means the pension scheme will remain affordable and sustainable; GMB members have recognised this as shown by the overwhelming vote in favour".

The UNISON ballot is ongoing. The ballot helpline close's tomorrow and the vote ends on 24th August.  Of course the UNISON miserablists are being even more miserable than usual at the GMB result. Does the GMB have miserablists or is it just an affliction that UNISON suffers from?