Update – the rule of 85 Briefing No 132
This briefing provides an update of the proposed
changes to the Local Government Pension Scheme, in particular
the decision by the Scottish Executive to abolish the rule of
The Scottish Executive View
Tom McCabe MSP, Minister for Finance and Public
Service Reform, announced (17th January 2006) that the Scottish
Executive will abolish the rule of 85 from the Local Government
Pension Scheme (LGPS). The Minister, following a similar decision
taken by the UK Government in respect of the LGPS in England and
Wales, has decided that retaining the rule would be incompatible
to a forthcoming EU Directive on Age Discrimination.
Both UNISON and CoSLA believe that the rule of 85
does not conflict with the EU Directive and have legal opinion
to confirm this.
This view was further strengthened when Katharina
von Schnurbein, the EU's spokeswoman on employment, social affairs
and equal opportunities, said the Scottish Executive was wrong.
She cited Article 6 of the directive, which states that governments
can treat people differently on the grounds of age in certain
Von Schnurbein added: "It's an artificial debate [and one
that] is only going on in Britain. The directive has no influence
on pension value or pension age. It is completely up to the member
state. If they think it is reasonable for people to retire at
60, under EU law that is perfectly legal.
This decision has also attracted criticism within
the Scottish Parliament with John Swinney, the SNP shadow finance
minister, stating, "The government is short-changing local
government employees and has been caught out for using the EU
as a convenient institution to blame when all it is trying to
do is pilfer from the pension funds."
This decision by the Executive also fails to take
into account the differences between the Scottish LGPS and the
LGPS in England and Wales. The Scottish funds are generally regarded
as more healthy and do not have to cover any revocation costs
that the English and Welsh funds have to cover when the rule of
85 was briefly abolished and the reinstated in 2005.
Further action in the Scottish Parliament has included
a motion by Janis Hughes MSP calling on the Scottish Executive
to consult with CoSLA and trade unions to find a solution to this
issue. A similar motion was also put forward by Carolyn Leckie
The rule of 85
The rule of 85 allows LGPS members to voluntarily
retire from age 60 on an unreduced pension where the sum of their
age plus membership, in whole years, equals 85 years. Scheme
members satisfying the rule between age 50 and 60 may also retire
with no actuarial reduction to pension, but only with their employers'
Impact of Abolishing the Rule of 85
The LGPS does not only affect local government workers,
it also includes staff in higher and further education, the community
and voluntary sector as well as others such as the police support
Abolishing the rule of 85 would result in staff
either retiring on a reduced pension or carrying on in their jobs
when they are not fit to do so. This could result in more workers
leaving on ill health grounds. How would you feel if your elderly
mother or grandmother was being looked after by a home help or
residential worker only a few years younger than them, and who
cannot cope but cannot leave?
These people of course have also signed up to do
their jobs on the basis of the existing pension provisions. They
all contribute their own portion of their future pensions – indeed
the local government scheme is funded by employer and employee
contributions and is ironically the one public sector scheme where
early retirement is directly under threat!
Pay in the public sector is significantly less than
people could earn in the private sector, so the existence of a
basic decent pension is a recruitment incentive.
Of course early retirement is not compulsory for
public servants. These facilities are open to people to use or
not – often only with approval of their employers. Indeed the
flexibility offered by the early retirement facilities is most
often used by those same employers when they are faced with 'efficiencies',
reorganisations – both internal and external and other changes
that happen to public sector organisations with monotonous regularity.
Exactly how efficient is it to have surplus staff with no jobs
to do because they cannot take their pension?
It is not either the case that these pensioners
are the 'fat cats' that some commentators are putting about. Hymans
Robertson – a leading actuary – say that 75% of local government
pensions are less than £5,000. Women – who make up the majority
of most public sector scheme members have a staggeringly low pension
of £1,616 per annum. If Tom McCabe is serious about tackling discrimination
in Local Government pensions here is a better place to start!
UNISON recognises that some changes need to take
place. The demographic changes, and particularly the changing
nature of work mean that we remain committed to discussing and
negotiating positive changes to existing schemes. Although it
should be clear that increasing life expectancy is not a phenomenon
that affects everyone equally. For example cleaners have experienced
NO increase in life expectancy in the last 25 years.
Further information on the LGPS can be found at:
UNISON Scotland Pension Links
UNISON Pension Campaign
Action for Branches
Branches should ask their members to contact their
MSPs and get them to sign up to Janis Hughes motion (S2M – 3872:
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