Sunday 16 March 2014

PCS faces financial crisis over own staff pensions



Rumours of the main civil service union is facing financial difficulties have been flying around for a while now, though usually denied by the Grandees in charge. Only recently I was told by NEC member Ian Albert that the unions finances were healthy.

This despite staff cuts, disputes with the staff's union the GMB and the lack of a diary for members, now the the truth is out.

The Independent reported last week that:

A staunchly left-wing trade union that has fought a bitter campaign to protect the pay and conditions of 250,000 public-sector workers is poised to impose draconian terms on its own staff’s pension plans.

Documents seen by The Independent reveal the Public & Commercial Services Union faces a pensions crisis, with the combined deficit on two of its schemes estimated to be as high as £65.5 million.

The figure is more than double the organisation’s £27.6 million annual income, which is expected to fall again this year and threatens a proposed merger with Unite.

The PCS is considered one of the most militant unions and has orchestrated public-sector walkouts over the Government’s pension reforms, such as the eventual rise in retirement age to 68.

The union’s general secretary, Mark Serwotka, has described changes to civil service pensions as a “tax on public-sector workers”.

However, the PCS has privately admitted, given its limited financial resources, that “it is no longer affordable to maintain benefits at current levels” and “no one single change to benefits is going to be sufficient to bridge the gap”. The documents show the Pensions Regulator criticised the PCS’s previous valuations of its pension schemes as being too optimistic over its ability to afford them.

Staff will be asked to accept changes that would mean it would take 45 years of employment to receive half of their salary in retirement, with a lump sum no longer paid at 65 in typical circumstances, and any increase in pay above 1.5 per cent not pensionable.

It is thought this could affect around 300-400 staff, many of whom could have expected half their salary in retirement after 30 years’ service.

A union source said that the “Government is going to have a field day with this”, given the PCS’s “Protect our pensions” campaign that condemned the Coalition for wanting public-sector workers to “work longer and retire with less”.


No kidding Sherlock.

The Scottish Secretary, Alistair Carmichael has already observed:

To see them now imposing on their own staff a worse deal than we offered their members is a bit rich.”

Unsurprisingly the report goes on to discuss the problems faced in a possible merger with the Unite, who would have to make up the shortfall in any future merger. This explains why all is seemingly quiet on the merger front inside PCS itself at the moment.

The Socialist Party may shortly need to look at its' taxi bill again.

Questions need to be asked why PCS members haven't been officially informed about this yet!

5 comments:

  1. Certainly selective quoting in terms of anything I've ever said on PCS Finances. I thought better of you.

    You should have a look at the PPF Index 7800 of Defined Benefit schemes to understand the difficulty of managing pensions schemes in the current climate:

    http://www.pensionprotectionfund.org.uk/Pages/PPF7800.aspx

    All pension schemes are in a very different position in terms from what a Government can afford or choose to spend. PCS income is only from its members. It would be wrong to raise subscriptions significantly at a time when members are faced with pay freeze or 1% only pay rises.

    Many employers have just ended defined benefit schemes altogether and put their staff on much less valuable defined contribution schemes. So I won't have any comments from a Minister about this. We've tried to maintain our DB scheme. And unlike the Government, PCS are having detailed talks on every aspect of the issue with GMB members and their representatives.

    In February, in one month, the Index of nearly 7,000 Defined Benefit Schemes showed an overall increased deficit from £27.6 billion to £76.5 billion - an increased deficit of nearly £50 billion in one month alone! In March the index showed a decreased deficit down to £61.2 billion - over £15 billion in one month.

    These are huge sums, even in terms of what Mr Osborne will be considering in his budget this week.

    This is why the Pensions Regulator is taking a very cautious line with all pension schemes on deficit recovery due to market volatility etc.

    Of course, pension position and changes will be reported to members at the appropriate time. But unlike the Government again, PCS management is proceeding in discussion, agreement and consultation with GMB union, scheme Trustees and ultimately subject to a ballot of GMB members. There are difficult choices. This has not concluded. It would be wrong to pre-empt that process with premature announcements. Even to satisfy you Howie.

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  2. Published as promised Ian, though I don't understand why you used a nom de plume given its clearly you.

    My quote of you was hardly selective, simply one from memory as I no longer have the relevant e-mail. Further I would argue that given this appeared in the National Press I would have expected something from PCS about the issue even if it was not a definitive statement. Not to satisfy me but at least some form of explanation for the members.

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  3. Just seen the blogs. Actually it's not me - whoever I am. Anything I write is in my name. However, there's not much I disagree with Revenue Observer about in truth . Although Revenue Observer fails to mention the PCS books have been broadly balanced despite falling membership - a notable achievement.

    I don't accept that PCS should comment on every story in the press, especially when negotiations are continuing. I agree we should take no lectures from Ministers.

    But thanks for thinking of me Howie! Almost promoted to Grandee status. Wow!

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    1. Sorry Ian, but it certainly did sound like it was you! I now see the identity was created specifically to comment here. I do wish people would comment in their own names.

      As for being a "Grandee" of PCS, you have already reached that hallowed rank old chap!

      However what does "broadly balanced" mean? They are or they aren't? The pensions deficit suggests otherwise. Please elucidate further.

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  4. The PCS Diary issue upset a lot of my branch members to the fact that our branch put up a motion to reinstate them.

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