PENSIONS ROBBERY

The UK government plans to increase pension contributions by 3.2% over three years, grabbing £2.8bn, for the Treasury - not for pensions.

In Scotland this means around £375m being raided from Scotland’s budget, £140m from local government and further £140m from health.

The Scottish Government has now written seeking views on how they should respond. UNISON pension contacts gathered in Glasgow on 7 February to discuss a response.

“This increase bears no relation to the actual cost of public service pension schemes in Scotland - it is a simple cash grab from our members salaries”, said Scottish Organiser Dave Watson.

“The Scottish Government is a party to an agreement on the funding of the new pension schemes. That agreement included an increase in average employee contributions and a commitment on cost sharing. This plan would be a major breach of that agreement.”

The Treasury may argue that this cash grab reflects an alleged past underfunding of the schemes. “If there has been any underfunding it has been during the period (mid 80’s to mid 90’s) when many employers took a contribution holiday. Employees have always paid the full contributions”, said Dave.

“We are particularly concerned that a substantial increase in contributions is likely to result in significant numbers of members opting out of public service pension schemes. A point we also made to Lord Hutton who is heading up the Pensions Commission at his recent visit to Scotland.

“Of course this isn’t the only way governments are breaking the pensions ‘contract’ members believed they had entered into."

The switch from the RPI to the CPI will result in a cut in pension benefits of at least 15%.

More details on this and other pensions issues in the latest Scottish Pensions Bulletin on the website.

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