Assembly Sponsored Public Body Pensions

The First Minister:

 I am grateful for your permission, Llywydd, to make a statement on the pension arrangements for the Assembly sponsored public bodies being merged.
I appreciate more than most that this is an anxious time for staff affected by the mergers that will take place on 1 April. No-one should be seeking to create any uncertainty for them. Sadly, some are not showing them the same consideration, and are stirring up a pointless furore in the media.

The key points are as follows. How can individuals make sure that they will not lose out on their pensions as a result of the merger? On transfer, it is intended that staff will simply continue as members of their current schemes, with no detriment. They will, as soon as it is administratively possible, be provided with pension statements and independent financial advice and sufficient time in which to consider their individual situations and make informed choices about their pension future. Any decisions taken will be backdated to 1 April, and any necessary adjustments made.

Is it likely that many staff will join the civil service pension scheme? As regards the WDA, whose pension scheme, administered by the Rhondda Cynon Taf pension fund, shows a considerable deficit, we envisage that the majority of staff will remain in their existing pension scheme, because cash-equivalent terms would not be particularly favourable. In the majority of cases, a cash-equivalent transfer would secure less than year-for-year service. However, some staff, most likely those with short service in their existing ASPB pension scheme, may wish to transfer into the civil service scheme. We are therefore providing staff with a set of choices for them to make to suit their personal circumstances, and we will support them in making an informed decision through the provision of independent financial advice.

Would these ‘bulk transfer’ terms suit everyone? Experience has shown that most staff prefer to maintain the status quo and stay in their existing scheme. Our plans are therefore for staff to be able to do that, but also to provide them with the right to transfer into the civil service scheme as an alternative if it suits their individual circumstances. What about previous transfers? It is necessary to look at each transfer individually and to manage it in the best possible way for the staff and the employer. The Assembly Government is a diverse employer and already has some staff who are members of pension schemes other than the civil service pension main pension scheme. On this basis, the intended arrangements for the Welsh Development Agency and Wales Tourist Board staff pensions do not set a precedent. The alternative would be unaffordable, namely to take £38 million from front-line budgets to make up the cost of the transfer from the Rhondda Cynon Taf pension scheme. That way, all staff from WDA could transfer in with all their years of service reckoned in full as previous years of service, but it is unaffordable. Like many pension schemes in the public and private sectors, the WDA component of the RCT pension scheme requires action over a number of years to maintain its financial security.

The Wales Tourist Board has a small problem in that it is a member of the British Tourist Authority scheme, which has almost a notional deficit of just over £100,000. In addition, we have agreed that WDA and WTB staff will have the option to be eligible to join the civil service pension scheme for their future service in the merged organisation. We informed staff of this eligibility in a joint message from unions and management dated 31 January, which has been e-mailed to all staff, and we are currently in discussions with the relevant pension scheme administrators on how the previous service of WDA and WTB staff would be affected should staff wish to come in to the civil service pension scheme. To this effect, we will provide staff with the opportunity to take independent financial advice on the implications of either freezing their previous service in their existing pension scheme or transferring their previous service into the civil service pension scheme under terms to be agreed with the relevant pension scheme administrators, and taking cognisance of the deficit. I will ensure that a copy of the 31 January staff notice is made available to all Assembly Members. I emphasise that Education and Learning Wales and the Qualifications, Curriculum and Assessment Authority for Wales staff, who will be merged on 1 April, are already members of the civil service pension scheme and are, essentially, unaffected.

This outcome is entirely consistent with our previously stated position. In one of our first staff notices, dated 30 July 2004, we confirmed that staff would be able to remain in their current pension scheme or move to the civil service scheme.

We also confirmed that we would enter into negotiations about the opportunity for staff to transfer previous service into the civil service pension scheme, but taking recognition of the WDA deficit problem. This is what we have done—there has been no u-turn and I deprecate attempts by anyone to try to stir-up confusion among those staff at a difficult time for all concerned.