Connected Research

Union policy research in the 21st century

PWC survey predicts ‘acceleration in pensions shake-up’

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Accountants PriceWaterhouseCoopers produced on Tuesday this week an alarming survey of firms’ intentions as regards their pension schemes.

The future is, according to the survey, an apocalyptic one for the UK’s occupational pension landscape, with employers now looking to extend the changes they have already made to defined benefit provision to future service in such schemes; a large minority of employers looking to do no more than the bare minimum in respect of personal accounts when introduced in 2012; and a growing number of private sector employers believing the public sector has an ‘unfair advantage’ in terms of being able to offer quality defined benefit schemes.

The publication of the survey (based on 157 responses out of the 1,000 companies questioned) led to a thundering leader in the Telegraph, which has been well deconstructed in terms of its arguments by Tom over at labour and capital.

For the TUC, Brendan Barber pointed out that companies were using the recession as an excuse to cut pensions benefits, and that ‘Too many attacks on pensions are no more than companies walking away from a long term commitment to their staff, and are part of the same short-term profit seeking that gave us the financial crash.’

The survey is just that – a survey (and a relatively small one at that) and, although I’m not about to dispute the direction of its findings (the herd mentality of employers in this respect is well-documented), its overall vision of imminent apocalypse is one that, perhaps, serves the particular ends of its organisation very well. At the same time, as Connect’s conference heard on Thursday this week in response to the O2 South motion on protecting final salary provision, it is clear that the issue is one of the most significant facing trade unions presently, and is also one of the key objectives for the union’s incoming Executive Council.

It seems to me that, if the trade union movement is to be able to react effectively to this, we need at least two things:

(1) some greater factual information about the situation of public sector schemes which both deals with the myths and presents the proper facts, since public sector provision is likely to come under increasing attack; and

(2) some real ideas about what can be done to support what remains of final salary provision. Here, I don’t mean a general reference to ‘tax breaks’, what I mean is some specific arguments about, in this example, precisely what tax concessions can be used and how and what the effect on schemes would be. More simply, what might work and what probably wouldn’t. If we’re to be able to get anywhere in this critical next year or so, we do need to have a clear understanding at the policy level not just of the need to defend schemes in practice, negotiating with employers proposing particular changes – which every trade union accepts – but also of what actually can be done at the policy-making level which would have potentially have a real impact on keeping schemes open. That requires some good, hard thinking and, no doubt, a greater desire to work with the pensions industry on issues where we can reach agreement.

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Written by Calvin

26/06/2009 at 6:14 pm

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