Connected Research

Union policy research in the 21st century

Dear Yvette…

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Welcome to your new job as Secretary of State for Work and Pensions. We hope you enjoy a long tenure in your new role and one that turns out to be longer than those of many – if not all – of your predecessors. We’d also like to congratulate Angela Eagle on her promotion to be your new Pensions Minister.

You will see a bulging in-tray of press comment and opinion about the state of UK occupational pensions and you will no doubt have read about Barclays’s decision last week to consult on closing its final salary scheme to future service for existing members from December – an opportunistic decision against which Unite has committed itself to support its members fully should they decide to stand up to employers ‘hell bent on eroding pension benefits during the recession’. You will also have noted that BP is to seek to close its pension scheme to new members from next April, despite the scheme being reported to be in surplus.

Apart from welcoming you to your new role, we would like specifically to ask you to do a number of things which seek to provide assistance to those defined benefit schemes that remain:

1. call a halt to your department’s rolling deregulatory review which, we believe, sends entirely the wrong signals to an industry beset as it is by the herd instinct and which thus only serves the further destabilisation of existing provision

2. recognise publicly that the UK’s system of occupational pensions provision is the main defence against poverty in retirement and that the closure of much of this provision represents essentially an attempt to nationalise the problem of poverty in retirement, and then go on to issue a public statement of support for occupational pensions provision

3. establish what practical signals the government can provide which support good defined benefit provision in practice and which may encourage employers to re-open closed provision. This might well include the use of the tax system to support employers which continue to offer, and/or choose to re-open, such provision

4. take steps to extend strong member involvement in pension scheme governance

5. encourage the Pensions Regulator to take a realistic practical view of mortality and likely investment returns, within the context of the scheme-specific funding regime that now applies, and to look favourably on employer attempts to deal with deficits given that valuations have been unduly influenced by the decline in assets marked by the current economic circumstances.

There are a number of individual initiatives that you might want to explore. But we believe that the above policy stances would represent a good start for a government intent on re-establishing good occupational pensions provision in this country.

Yours sincerely,

Connected Research

Edited to encompass reference to appointment of Angela Eagle to replace Rosie Winterton as Pensions Minister.

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Written by Calvin

08/06/2009 at 1:05 pm

Posted in Pensions

Tagged with ,

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