UNISON actuarial report warns of ‘death spiral’ to Pension Fund from mass outsourcing ‘One Barnet’ programme

1st September 2011 admin Uncategorised

Barnet UNISON Press Release:

1 September 2011

FOR IMMEDIATE RELEASE

UNISON actuarial report warns of ‘death spiral’ to Pension Fund from mass outsourcing ‘One Barnet’ programme.

In wake of concerns about the Barnet Councils One Barnet mass outsourcing policy, UNISON commissioned a report on the ‘Potential impact of reduced active membership of the London borough of Barnet Pension Fund’

The report makes scary reading for residents, staff and councillors:

“The net cash flow position of the Fund could reduce from around £22.9 million (positive) in 2010 to between £16.9 million (positive) and £25.0 million (negative) in 2012. Opt outs as low as 40% could result in a move from the Fund being cash positive to cash negative.

The Fund had a deficit (i.e. the difference between the assets and the liabilities) of £190 million as at 31 March 2010, which was partly as a result of the wiping out of around £27 million of the Fund’s assets following the collapse of the Icelandic bank. The Council is currently paying around £10.7 million a year to clear this deficit

The combined impact of the lower assets and higher liabilities will increase the deficit and could almost double the Council’s deficit contributions to £19.7 million a year from 2013. This is ultimately a cost to the taxpayer.

“A significant shift in outsourcing policy by Barnet Council set against a backdrop of mass opt-outs expected as a result of Government’s proposals to increase member contributions in the LGPS from April 2012, could lead to a significantly reduced active membership of the Fund.”

At tonight’s Pension Fund Committee (Thursday 1 September), Agenda Item 9 reports the Council have £7 million less than they thought they had.

“The overall effect of the adjustments listed below is to decrease Fund assets by £7.0m (Agenda 9)

On 22 June 2011 Pension Fund Committee were informed Barnet Homes had not noticed the Bond for Connaught’s Plc had lapsed. The consequence is an unplanned £1.492 million bill to Barnet council taxpayers

The ‘One Barnet programme’ is not a new political ideology, it is a rehashed version of the ‘contracting out madness’ of the 1980’s which damaged public services and destroyed the lives of the a workforce abandoned to unscrupulous employers.

We have already had a warning of what could happen to our Pensions with outsourcing. Between 2000 and 2004 hundreds of council care workers were *TUPE transferred out of the council to Fremantle Trust and Housing 21, there are very few TUPED staff still contributing to the Fund.

Three years ago UNISON raised the risk to the Pension Fund, however until now the Council have fobbed off our concerns. That all changed at the Budget and Performance Overview and Scrutiny Committee Meeting June 22 2011 a report entitled ‘One Barnet’ highlight report was produced. If you scroll down through the document, for the first time you see the Council acknowledges there is a risk.

“Risk Number CP0010

Risk: The negative affect on the Pension Fund due to loss of payees

Consequences of risk: Potentially reduced pension fund thus raising the necessity to find finances from elsewhere”

The Council is playing high stake risks with our member’s pensions and council taxpayers future payments.

The Council need to recognise that ‘political dogma’ also known as One Barnet programme cannot continue to expose residents, services and staff to this high risk strategy and expect them to pick up the bill.

Barnet UNISON is asking for the One Barnet programme to be put on hold.

On Tuesday 13 September up to 400 UNISON members will be taking strike action as a result of a Trades Dispute UNISON has with the One Barnet programme. They have dubbed the action Barnet Independence Day.

* TUPE = Transfer of Undertakings (Protection of Employment) Regulations

End.

Contact: John Burgess Barnet UNISON on 07738389569 or email: john.burgess@barnetunison.org.uk

Useful Links

1. ‘The potential impact of reduced active membership of the London borough of Barnet Pension Fund,’ (First Actuarial LLP)

To read summary click on link below

http://www.barnetunison.me.uk/sites/default/files/UNISON%20Barnett%20Council.31%20August%202011.SUMMARY.pdf

To read full report click on link below

http://www.barnetunison.me.uk/sites/default/files/UNISON%20Barnet%20Council%2031%20August%202011FINAL.pdf

2. Life not so easy for council facing £1.5m outsource bill

http://www.localgov.co.uk/index.cfm?method=news.detail&id=100493

3. Barnet Council Pension Fund Committee papers 22 June 2011