Unions will be joining the movement to reform public sector pensions – but to protect rather than reduce their provisions. Unison, the biggest public sector union, has voted to lobby the Government to tighten up the Local Government Pension Scheme, which invests billions of pounds on behalf of 3.5 million current and former council workers.
The union wants ministers to apply a European Union directive that would force pension scheme managers to run the scheme in the sole interests of members.
The move came after Unison general secretary Dave Prentis told his annual conference in Bournemouth that the coalition Government “won’t know what hit them” if they seek to erode public sector pay and conditions.
The EU’s Institutions for Occupational Retirement Provision directive was passed in 2003 with support from the then Labour Government. It calls for pension funds to be separated from the sponsoring employer, and for assets to be invested “in the best interests of members and beneficiaries”.
Unison is concerned that many local authority pension funds are held in council-controlled bank accounts, at a time when councils are having to cut their budgets. An official told Tribune last year that the union had fought a “running battle” with Whitehall to implement the directive.
Unison and the Government battled for domination of the pensions debate this week after Deputy Prime Minister Nick Clegg branded public sector pensions “unreformed” and “gold-plated”. Mr Clegg said workers deserved a decent retirement income, but that the gap between the private sector – where some 90 per cent of final salary schemes have closed – and the public, where they mostly still apply, had to be closed. “It’s not just unfair, it’s not affordable”, he said.
Mr Prentis countered that pension scheme affordability needed to be measured over the long term and blamed falling share prices for rising pension scheme costs. He promised conference that Unison would ballot for national industrial action if Mr Clegg “comes for our pensions”.
The union also expressed alarm after a leaked email suggested the Treasury was preparing to abolish a rule protecting workers’ pensions in company transfers. Business Services Association chief executive Mark Fox said he understood that the Fair Deal provision would be scrapped in next week’s emergency Budget, in a move Unison said would “condemn low paid workers to a poverty pension”. Mr Fox denied having seen advance information about the Budget. The Treasury declined to comment.
