Government attacking on our Pension and Redundancy Payments
The Westminster Government has pushed through parliament final regulations that will enact the absolute cap of £95,000 on all exit payments in the public sector.
This means that any exit payment made after the implementation date (anticipated to be on, or soon after 26th October) will be affected.
UNISON are campaigning to demonstrate the severe impact the changes would have on various different types of local government workers.
Read National UNISON update 6 October 2020
The consultation closes 9 November 2020
https://www.gov.uk/government/consultations/reforming-local-government-exit-pay
What next?
In order to alert UNISON members to the seriousness of these attacks UNISON have provided 6 hypothetical worked examples below. (N.B. where the examples below talk about being a ‘member’ this means pension membership not UNISON membership).
Examples:
Individual 1: is 59 years old. Member for 19 years and is currently paid a salary of £29,000 per annum. She broadly fits the profile of the average member. Her new redundancy package does not contain a cash payment on top, as her pension strain is larger than the combined SRP and DSP. Member benefits are not affected by the £95,000 cap but are reduced under proposed reforms as SRP and DSP are no longer paid in excess to pension strain. Under the proposed reforms, benefits on redundancy are reduced by around 37%.
- Individual 2: is 55 years old and has been a member for 25 years. He is paid a salary of £80,000 per annum. His relatively young age means that he receives a high pension strain. Benefits are reduced under proposed reforms as SRP and DSP are no longer paid in excess to pension strain and pension stain is capped at £95,000. His new redundancy benefits are £95,000, as his pension strain is already over £95,000. Under the proposed reforms, benefits on redundancy are reduced by around 61%.
- Individual 3: is 61 years old. He has been a member for 31 years and is currently paid a salary of £41,000 per annum. Member is entitled to a cash payment as the DSP the member would have been entitled to is higher than pension strain (net of SRP). Member benefits are not affected by the £95,000 cap but are reduced under proposed reforms as full SRP and DSP are no longer paid in excess to pension strain. His redundancy benefits are reduced by 38%.
- Individual 4: is 65 years old. She has been a member 7 years and is currently paid a salary of £20,000 per annum. Member is entitled to a cash top up as pension strain is less than SRP, and DSP the member would have been entitled to is greater than strain (net of SRP). Member benefits are not affected by the £95,000 cap but are reduced under proposed reforms as full SRP and DSP are no longer paid in excess to pension strain. Under the proposed reforms, benefits on redundancy are reduced by around 25%.
- Individual 5: is 60 years old. She has been a member for 4 years and is currently paid a salary of £35,000 per annum. Her new redundancy package does not contain a cash payment element as her pension strain is larger than the combined SRP and DSP. Member benefits are not affected by the £95,000 cap but are reduced under proposed reforms as full SRP and DSP are no longer paid in excess to pension strain. Under the proposed reforms, benefits on redundancy are reduced by around 29%.
- Individual 6: is 67 years old and has been a member 23 years. She is currently paid a salary of £34,000 per annum. Her age and service history mean that there is no pension strain. The member is not affected by the £95,000 cap. Her redundancy package will be unchanged and will consist entirely of the cash payment which is equal to her original SRP plus DSP.
What can you do?
If you have any questions and concerns please email contactus@barnetunison.org.uk