Railway unions and employers – look to a 3rd way to provide pensions.

The Railway Strike which starts today and could recur all summer is in large part about pensions. Cuts in real pay through below inflation pay rises feed through into lower pensions while changes  in the formula for calculating pension benefits make for a further shortfall in expectations.

Taking things away from people, once they’ve been promised is not easy to do. It results in industrial unrest and when the workforce is unionised and where the union is well organised, the result is industrial action.

Unfortunately, there are commentators who are only too keen to fan the flames of prejudice  and deepen the divide between haves and have nots.

It is true that when the value of “deferred pay” – eg pension , is added to today’s pay, many railworker’s total remuneration looks a lot more attractive. The same can be said for all public sector workers – and the quasi public sector workers who are entitled to benefits from SAUL and USS.

People may think that by simply cutting pay and benefits of the public sector and those with quasi public sector pensions, we are creating a fairer and juster society.

I have some sympathy with the argument at an abstract level, but not in practice. In practice, cutting benefits without proper negotiation leads to strikes and that is what we’ve got. We have strikes at universities and on the railways, we are threatened with strikes throughout the public sector. Pay and deferred pay are the reasons for the disputes.

Another way – a better way

There is another way, the way pursued by Royal Mail. It looks like the way UUK want to go with USS – linking pensions to the performance of the scheme  and paying increases out on the basis of what’s in the pot. This is known as conditional indexation and it is only a short step away from putting a scheme on a collective DC footing.

However, those commentators who are noisiest about public sector benefits are also the fiercest critics of  CDC. They create a tension on both sides which is not helpful to the resolution of disputes or the bridging of trust between the two sides of the argument.

We will have , by August , the means for schemes like the Railways Pension and the Transport for London pension, to apply to be CDC schemes. We have advisers who are used to helping explain CDC to unions and employers and we have in at least one union (CWU) a group of experts in pension scheme dispute resolution.

Rather than fanning the flames of the dispute, the journalists and commentators who are writing about the divide between those who have DB and those who rely on DC pensions, should look to a third way – in place of strife.

A woman who solved problems.

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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1 Response to Railway unions and employers – look to a 3rd way to provide pensions.

  1. K M Jeary says:

    Cambridge University is paying a flat £1000 pounds one-off in July to all staff. The VC is only too aware of how angry most of his staff are, and the fact that younger members of staff don’t want to join USS. It is also acknowledged that it is becoming increasingly difficult to recruit the next generation of internationally competetive staff and even the assistant staff who keep the wheels turning. Considering how it would appear the government are looking to depend on universities to raise standards, research and the economy, I would say that they have not only shot themsleves in the foot, they have actually amputated both feet. Amd don’t even mention Horizon…

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