"Ambitious Enough? The future of workplace pensions"

On Tuesday morning there was a TUC seminar on workplace pensions Chaired by Assistant General Secretary, Kay Carberry. Keynote speaker was Minister for Pensions, Steve Webb MP.

In his speech he promoted his vision of "Defined Ambition" pensions.  He thinks that Defined Benefit (DB) schemes are finished outside the public sector but wants something better than Defined Contribution (DC). Problem with DB is cost to employer and volatility, while problem with DC is uncertainty and protection against inflation.  He wants something that is not as good as before (DB) but better than the minimum (DC).

He suggested that employers may pay an insurance company (as a company perk) to protect the value of a DC scheme so that on retirement you would get at least your contributions back. He also said that what employers want with pensions is a level playing field and they don't want to pay more than competitors.

My question to him was that are we just trying to reinvent the wheel? If workers need certainty and inflation protection then the answer can only be DB. A reformed DB, where you look for example at employer caps in contribution (I forgot to mention smoothing). In Japan nearly 100% of pension provision is still DB, while in South Korea which has amongst the worlds longest life expectancy they are still opening new DB schemes. If companies want a level playing field then introduce compulsion.

He replied that he did not know why DB was still so prevalent in Japan. He thought it may be related to inflation? He also said it would be inconceivable to get political consensus in the UK  to agree to DB pension compulsion in the UK.

Which I would agree with. It will be impossible to get consensus from right wing Tories. That is why the next Labour Government with a decent Parliamentary majority should just do it, because it is the right (or rather left)  thing to do.

You can check out my twitter comments on the rest of the seminar here 5 February 2013.  There were some really fascinating contributions from other panel members: Doug Taylor from "Which?"; Professor Orla Gough from Westminster Business School and Craig Berry from the TUC.

I had another chance at a question towards the end of the seminar, where I asked the panel that there is a lot of interest currently in "Predistribution" and the concept of a living wage, since the taxpayer should not be spending money subsiding bad employers who pay poverty wages. So should we in the pensions world be also talking about a "living pension" and not allowing bad employers who don't provide one to subsidised by taxpayers as well?

Not sure if I got a full response from Panel. Craig Betty was supportive but  DWP civil servant, Mike le Brun, who took Steve Webb's place on the panel said that individuals will have to take more responsibility for their own pensions. In DB they were passive but in DC they must be active.

Which would seem to contradict his Minister comments about the problem with DC being that individual workers cannot understand the uncertainty and the inflation risk.

If the best brains in the Treasury and the City of London cannot accurately predict return and risk then what chance does Joe Public have with their DC pensions?

Fair Pensions Living Wage Standards (& poverty pay Metropolitan)

Late yesterday I attended most of a briefing by Fair Pensions on their campaign to get a Living Wage for all employees and subcontractors of the FTSE 100.

Check out my twitter feed for 5 November for some of the stuff I found interesting.

Some key points from seminar: Fair Pensions CEO Catherine Howarth, that they had some form of contact with 50% of FTSE 100 companies and 11% are or will be Living Wage employers.

While Rhys Morgan, the Director of the Living Wage Foundation said that 80% of employers who pay a living wage found that quality of work was improved. I was glad that he also quoted Labour Leader Ed Miliband as saying that a Living wage was "important but not the summit of our ambitions". UNISON argues for a Living Wage "plus" - not just £8.30 per hour (as welcome as it is) but also decent sickness pay, pensions, annual leave as well as trade union recognition and collective bargaining.

I had to leave early for a Pension committee meeting.

It is also rather ironic that during the "Living Wage week" that UNISON is running a campaign against Metropolitan Housing Association, which claims to be a charity and responsible employer.  Yet it paid £412,000 to get rid of its former CEO, while at the same time planning to pay its care workers less than a living wage and employ part time staff on poverty rates, so their their wages will be topped up by the taxpayer. How completely disgusting and shameful.

If you work for Metropolitan or want to show solidarity sign the Petition here and read the comments by staff who in 2012 face being forced below the poverty line not above.  

Metropolitan Housing: Poverty Pay, Pay Offs and Predistribution

NO PROGRESS IN METROPOLITAN CONSULTATION MEETINGS

A series of cost-cutting proposals presented to UNISON by Metropolitan housing association have been firmly rejected by the union’s members.

Metropolitan are conducting a 90 day consultation on changes to the terms and conditions of its 887 staff who are employed as Care and Support workers. The proposals include the reduction of staff salaries by up to 40%; reducing the number of job roles from 44 to 4, introducing flexible contracts and reducing management and administration posts.

Controversially, a private consultant’s report presented to the Metropolitan Board in December 2011 recommended employing more low-paid, part time staff “who could supplement their income by claiming working tax credits”.

If implemented, the proposed salary cuts will slash the wages of front line staff to below that of the GLA’s recommended London Living Wage. Metropolitan’s 2011/12 Financial Statement revealed that the former chief executive, Bill Payne, received a record payout of £412,000 in 2011.

UNISON’s Housing Associations’ Branch Secretary, John Gray, commented: “The hypocrisy of Metropolitan’s position is absolutely staggering. It pays £412,000 to honour the employment contracts of a departing chief executive yet wants to rip up the contracts of hundreds of frontline staff in order to impose wage cuts of up to 40%”.

UNISON Regional Organiser, Colin Inniss stated: “our members at Metropolitan are very angry about this and rightly so. Unless the Board sees sense and reconsiders its proposals we are heading for a serious dispute.

For Further information or comment please contact:

UNISON Housing Associations Branch Secretary, John Gray j.gray2@unison.co.uk
UNISON Regional Organiser, Colin Inniss or C.Inniss@unison.co.uk

Notes for Editors

1. Metropolitan manages 36,000 homes and provides housing and other services to 80,000 customers. In 2011/12 it made an operating surplus of £65.4M on a turnover of £244M.

2. Brian Johnson, formerly of Moat, has recently been appointed chief executive of Metropolitan.

3. UNISON’s Housing Association Branch represents 3,500 members in the Greater London Region and the South East.

The London Living Wage is designed to help people towards a minimum acceptable quality of life in our capital. It is calculated by the Greater London Authority and is currently £8.30

(This is from branch press release. I brought this matter up at our West Ham GC meeting last night with our MP Lyn Brown)

Metropolitan Housing CEO £412k payoff while carers wages to be decimated

I'm on route to Labour Party conference and still fuming from yesterday’s news. Metropolitan Housing Association has announced that its former CEO, Bill Payne, was paid £412,000 last year.  At the same time as its front line care and health workers have been threatened with 30% pay cuts. According to Inside Housing this is the biggest ever payout. He was only in post for 4 years.

Staff who care for the disabled and mentally ill are going to be paying the price for this greed and incompetence. Who on earth agreed these terms? Ironically Metropolitan are also planning to reduce redundancy payments to near the legal minimum. Someone over age 41 on £20k would get say £2000 if laid off, Payne gets £209k. One law for the Directors and another for everyone else.

This is a registered charity that is even planning to sack full time workers in order to employ part timers at rubbish money since they could have their wages boosted by Government tax credits. Such behaviours are simply vile in any organisation but this is not G4S but one which claims to be “socially responsible”. Ed Miliband talks sense about “Predistribution” and increasing the pay of the low paid.  Labour must oppose this race to the gutter.

This is all just unbelievable and shows that some (not all) Housing Associations are completely out of control, ungoverned and corrupted with rotten practises. This is destroying the reputation of the whole sector. Lets fact it, many remuneration committees are just "mates clubs". Advised by consultants who know they have stuff the mouths of their clients (the Senior Management team and Chairs) with money or they will be fired. How can the excuse of always being in the top 25% quartile of pay not be anything but a means to ratchet up SMT pay?

For a while now I have been going to Labour Party conferences and asking first Labour Housing ministers, now shadow ministers, what are they going to do about poor governance and excessive executive pay in Housing Associations?  This year I hope lots of delegates do the same. Enough with the waffle. No government or Council money nor contracts should be given to organisations who act in this way.  We need a commitment to properly regulate and democratise associations by the next Labour Government.

Picture is of Metropolitan SMT on beano.

TUC 2012: Why Inequality Matters fringe

During lunchtime I went to this launch of an authorised summary of Professors Richard Wilkinson and Kate Pickett's "The Spirit Level".  The fringe was sponsored by the new "left think tank" Class (Centre for Labour and Social Studies).

Chaired by GMB Tim Roache. Unite General Secretary Len McCluskey kicked off by introducing "Class" and the reasons why it was set up. For too long right wing think tanks have dominated political policy and research. Katherine Round spoke next. She is producing a video documentary on "The Spirit Level". 100k copies of the book have been sold in the UK while the gap now between the rich and poor is the widest for 30 years.

While Richard started by posing the question - is inequality an ethical or empirical issue? Many perfer to believe it to be ethical rather than empirical since then it can be dismissed as being subjective. He explained that in the 600 odd lectures and seminars that he and Kate have given there has been no good counter arguments. People are surprised about how how inequality has such a profound impact in so many ways. He is clear that you cannot have a classless society without addressing income equality.

Mehdi Hasan from the Huffington Post told a witty tale about how he was thrown off a right wing USA TV programme (are there any others?) for arguing in favour of a wealth tax even though a "wealth tax exists in communist Switzerland and is supported by that well known Marxist, Donald Trump".

Owen Jones (not in picture he was speaking at another fringe) came on last and made the point that Labour leader Ed Milibands "Predistribution has a point since billions spent on family credit were in effect a subsidy for low pay...whatever predistribution actually means".