With the RMT announcing three days of national industrial action this week (21st, 23rd and 25th June), there will be over 50,000 workers withdrawing their services in the UK’s biggest transport dispute since 1989.
This will severely disrupt the country’s rail network and is attributed to “the inability of the rail employers to come to a negotiated settlement with RMT”. Meanwhile, London Underground members will also be striking on June 21st over pensions and job losses. It might be recalled that earlier this year, the University and College Union (UCU) also instructed its staff to strike in protest at pay, conditions and, once again… pensions.
Any pensions dispute can often be laid at the door of the move away from DB pensions, with Purple Book data from the PPF showing that only 11 percent of DB schemes are still open. With many businesses encountering financial distress in the current economic climate, some are facing the prospect of redundancies and changes in business ownership with the potential of resultant amendments to employee benefits and T&Cs, including pensions.
Points of View
It’s no wonder that pensions can be such a hot topic! Of course, unions will be looking at pension changes in a totally different way to employers. Fundamentally, the union will focus on protecting its members, while the typical employer will have a number of competing demands, including balancing affordability of its pension promises with the financial sustainability of the business. However, the two should not be mutually exclusive.
When certain amendments are made to employees’ pension benefits, an employer is obliged to undertake consultation with the employees impacted together with any relevant trade union representatives of the affected employees. Trade Unions are afforded special status under UK law, providing unique rights, and regularly play an important role in the complex interaction that can take place between management and its employees.
Whilst a trade union usually has no specific right to negotiate pension provision with an employer, it can make life extremely difficult if the trade union is unhappy with an employer’s pension provision or proposals by calling for industrial action; for example by way of strikes that we are about to experience this week, ‘work to rule’ and by applying significant pressure on the employer.
Trustees as Peace Makers
Any changes to a pension scheme are usually led by the employer but consultation and negotiation are key and it’s important that the interests and concerns of employee representatives and pension scheme members are considered as part of the process. As with most decisions that will have a fundamental impact on a business and its employees, early planning and engagement with all key stakeholders, ideally against an appropriate timeline, is crucial. This will hopefully provide more time for a negotiated settlement, rather than the statutory consultation period simply being adhered to, in order to encourage meaninginful dialogue (in summary, a minimum 60-day pensions consultation is required if certain specified changes to pension benefits are proposed).
Consideration should also be given to contingency planning to consider how any failure to agree between the parties might be resolved and of course the interests of non-union employee members who might also be pension scheme members should also be taken into account.
Protecting a Pension’s Passengers
The role of the trustee, in what can be a hostile environment, should always be to protect the interests of their scheme members and the promises made by the employer, not necessarily to have a say in any future pension provision. That’s generally a matter for unions and employers to determine. Nevertheless, a strong and experienced trustee can often be invaluable when it comes to striking a balance between the two opposing sides, not least by encouraging early collaboration which is often critical and key to reaching a successful conclusion. Whilst some disagreement is likely to be inevitable in addressing the different objectives of employers and employees, it is important that all stakeholders strive for unity; seeking to work together to achieve the best outcome for all parties.
In this way, issues which can escalate into costly industrial action which we are about to encounter this week can be avoided and early agreement can often provide the basis for building a lasting and long term relationship between stakeholders. As with lots of negotiations they encounter, trustees will need to understand the objectives, dynamics and challenges of all parties and have a strategy which they will be comfortable in articulating during negotiations.
The role of a professional trustee such as 20-20 Trustees, who are experienced in such matters, can often be extremely beneficial in supplementing a trustee board in discussions and negotiations to achieve best results.
Ultimately, the final decision on pension change does lie with the employer but, with a strong trustee, as one of a number of key stakeholders, negotiation doesn’t have to be toxic and, handled correctly, it is possible to achieve a mutually acceptable outcome.
With over 40 years-experience in trusteeship, 20-20 Trustees is an award-winning professional independent trustee organisation, committed to making a difference in the world of pensions. Whatever your trustee requirement, dispute related or not, we’re sure we can help. Get in contact today!