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Pension hike is third pay cut for public servants, says Prospect
The Cabinet Office consultation on pensions contribution increases was rendered ‘almost meaningless' because people were not asked whether there should be an increase - only how it should be implemented, says Prospect. The union's response to the consultation, which ended on October 20, said it was "part of an attempt to impose detrimental changes in a piecemeal fashion without the agreement of scheme members."
It was also unacceptable to consult on contribution increases from next April without clarity on what benefits, if any, scheme members will receive as a result of paying more, the union said.
Despite these failings, thousands of public servants have used the consultation to bombard the Cabinet Office with protests about the planned increases.
Prospect pensions officer Neil Walsh highlighted the fact that rates are set to increase at a time when public sector pay is frozen and when inflation is at high levels.
"With inflation running at about 5% a year, members are already experiencing real pay cuts of about 10% for the duration of the pay freeze," he said. "The April 2012 pension increase will also coincide with a reduction in the National Insurance rebate rate, leading to higher National Insurance costs."
Prospect points out that the decision that contributions should rise by an average 3.2% of pay was made by the Chancellor "and clearly has far more to do with the state of public finances, and government plans to meet the structural deficit, than issues relating to the sustainability of these schemes or fairness."
The response also highlights that:
- any moves to protect the lower paid by introducing a tiered contribution structure will be at the expense of better paid scheme members
- the tiers could result in some members being worse off in the event of a pay increase
- part-time workers will be disadvantaged, because their contribution rate will be based on full-time equivalent pay
- increasing contribution rates poses the risk of people opting out of the scheme. For every member opting out, the Treasury would not only lose their new, higher contribution but also the current contribution they are already making.