Defined BenefitJul 5 2018

Union considers nuclear pension reform ‘disgraceful’

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Union considers nuclear pension reform ‘disgraceful’

Trade union Prospect has considered the reform of the nuclear pension schemes to be "disgraceful", and is urging the government to honour the agreement made with these workers.

The Department for Business, Energy and Industrial Strategy launched a consultation in May outlining the reforms needed to transform the nuclear sector workers' defined benefit (DB) schemes into career average revalued earnings (Care) schemes.

The Nuclear Decommissioning Authority (NDA) employees are members of two DB pension funds – the Combined Nuclear Pension Plan (CNPP) and the SLC section of the Magnox Electric Group of the Electricity Supply Pension Scheme (MEGESPS).

There are more than 10,000 nuclear workers in these schemes, which have been closed to new entrants since 2008.

The government decided to reform these schemes as recommended by Lord Hutton's Independent Public Service Pensions Commission in 2011, and the deadline for introducing them is 2018.

Four million public sector workers have already moved to new pension arrangements and HM Treasury policy is for final salary pension schemes in the public sector to be reformed to a Care based scheme, the consultation said.

This reform is expected to deliver savings of £200m for the government, due to transfers from reduced benefits of the pension scheme recipients to decreased costs for taxpayers, the government added.

In its submission to the consultation, Prospect argued the nuclear pension funds are private sector, trust-based schemes rather than public sector, statutory schemes like those listed in the terms of reference of the Independent Public Service Pensions Commission.

A spokesman for Prospect said: “Reform of these schemes happened many years ago, when they were closed to new entrants, a step that went much further than the public-sector pension reform process.

“It is hypocritical for government to have previously insisted that these members could no longer retain access to public sector pension schemes only to now insist that public sector pension reform must apply to them anyway.”

In early 2017, the NDA initially consulted on two options for reforming these pension schemes.

The first option for reform was for a CARE scheme with pension age increased to state pension age.

The second option for reform would retain a DB pension scheme but with a cap on future pensionable pay increases.

Following discussions with unions, a third option was proposed – a CARE which retains members’ existing pension age.

Prospect said that its members engaged in this reform even though they “rightly view these attacks on their pension provision as a disgraceful betrayal of past promises”.

Sue Ferns, Prospect’s senior deputy general secretary, argued that members “felt compelled to engage in negotiations because of the real risk that government would seek to impose even more detrimental changes”.

She said: “Their efforts were key to reaching agreement over a significantly improved option for reform that retained existing pension ages for all members.

“It’s crucial that the reforms are implemented in a manner consistent with that agreement and, in particular, that the legal protections covering these members are put back in place in order to prevent further detrimental changes being implemented in the future.”

Prospect's 141,000 members are engineers, scientists, managers and specialists in areas such as agriculture, broadcasting, defence, education and children's services, energy, environment, heritage, shipbuilding, telecoms and transport.

maria.espadinha@ft.com