UK government needs strategy to reform pay and pensions to boost retention, says civil service union chief
The UK government needs to develop a strategy on civil service pay and pensions in order to help tackle workforce churn, the head of a civil service trade union has said.
Dave Penman, the general secretary of the FDA which represents senior civil servants and leaders in other parts of the public sector, told delegates at the Labour Party conference last week that there was a need for the government to develop a strategy to use civil service pay and reward to reduce churn in government.
Speaking at a fringe event hosted by think-tank the Institute for Government (IfG), Penman said reform was necessary but that “we haven’t got really a strategy from government thinking about: ‘what are those big pay and reward issues, including pensions, across the public sector, and what are we going to do about it’?”
It has been reported that the government is exploring options to offer public sector workers higher pay for lower pension entitlement, and piloting new flexibilities in pay and performance management is one of the recommendations in GGF’s Rewiring the state: Unlocking government transformation report.
The report, based on interviews with 12 permanent secretaries and led by former Cabinet secretary and head of the civil service Lord Gus O’Donnell, recommends the government consider giving staff the option to trade pension contributions for higher salary, with inflexible, outdated pay frameworks identified as a common structural barrier to reform.
“If we could say to our people, would you like more cash now, less pension later… I think that would be a great part of our people offer,” one permanent secretary said, suggesting that a rebalancing of remuneration could attract more talent to the civil service.
Read more: Major study with 12 UK permanent secretaries reveals key enablers to ‘rewiring the state’
Building public servants’ trust in pay and pensions conversations
Speaking at the IfG session, Penman also said that giving officials the opportunity to choose between increased salary and reduced pension entitlements could help keep officials in post.
Penman highlighted that the career average salary pension scheme for civil servants meant that officials could build up a pension pot that amounted to “over-provision” for some.
He said a more flexible pay-and-reward offer could give people the option of choosing to have a slightly smaller pension in return for additional pay at a time in their life when cash was much more important to them.
“I think a lot of people would look at that conceptually and say, ‘Actually – if I had those choices, I would exercise those choices,” he said.
This could help tackle the churn of civil servants in the UK government, he said.
“We spend tens of thousands of pounds training public servants who can’t afford to stay, and change mid-career. Or, if you want the talent to deal with the big issues we’ve got in the civil service, you simply cannot recruit that kind of talent from anywhere else – not the private sector, even elsewhere in the public sector, or indeed a small charity.”
At the same event, IfG chief economist Gemma Tetlow noted that because public sector pensions were unfunded, meaning they are paid when people retire, any reform to allow civil servants to move their pension entitlement to pay would increase public spending in the short term.
Penman said that the FDA and other public sector unions had tried to get greater pension scheme flexibility in negotiations that took place around reforming the scheme in 2011, “but the Treasury wouldn’t wear it”.
He added that trade unions were “always prepared to sit down and negotiate and try and get the best deal” on balancing the need around pay and pensions.
“Our members think it’s important – not just their terms and conditions, but they’re committed to trying to deliver good public services, so they understand that if there’s something [that] improves the ability to deliver public service, that would be something that they would value as well.”
However, he added there was a need for the government to build trust to have such a conversation with both unions and public servants themselves. When the government of the day had looked to make changes to public sector pensions in recent years, it had diluted the pensions offer, Penman said.
“Whether you think that’s reasonable or not, that’s essentially the direction of travel. So if you say to someone that they want to talk about pensions, then people are going to be very mistrustful of that.
“So I think to get to a point where you’re having an informed discussion of the package: whether that’s flexibility for individuals or the actual system and the balance, the first thing you need to do is build trust and have an informed conversation with – obviously – trade unions, but with public servants that says, ‘Actually, we’re not trying to cut here, but [we are thinking about] maybe rebalancing that package, but the [total] package remains the same between current pay and future pay’.
“You’ve got to work quite hard, I think, to convince the public service that that is the nature of the conversation. But if you are [able to], I think it opens up a conversation about what is the right package to suit both individuals and, crucially, help with the long term pay problems there are in public services.
“Most of the public services are blighted by issues around pay, so could reform give a better balance not just for individuals, but could it help actually address some of those issues when, as the famous saying goes, there’s no magic tree, but pay is a big issue in helping improve and reform public services.”
Read more: UK could increase civil service pay through cutting pension contributions
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