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Cymru/Wales Gas Branch |
Date: 09/09/2009
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Wales & West Utilities Staff News
OFGEM Reviews Pensions Again OFGEM, the regulator for electricity and gas distribution and transmission networks, has recently published a second consultation document on pensions - available at www.ofgem.gov.uk (click on live consultations). OFGEM's current practice, based on its six pension principles, allows regulated energy companies to pass through costs associated with their final salary pension schemes e.g. ESPS and Lattice, to consumers. OFGEM is concerned that its current approach may not provide "incentives... to manage pension costs". In 2008 OFGEM reviewed the six pension principles but decided to take no action. This second consultation coincides with OFGEM's ongoing review of the pricing formula for electricity distribution networks. The consultation document is 61 pages long and highly technical. It invites answers to a number of important questions by 11 September i.e. a six week consultation period at the height of the holiday season. This is a separate issue in itself. What does it mean for me? Members' first concern will no doubt be "what does this mean for me?" In this context it is worth bearing in mind that virtually all the final salary pension schemes offered by regulated companies are already closed to new members and hence have been subject to a degree of cost control. Also, there are a number of potential protections, for example The Electricity (Protected Person) (England and Wales) Pension Regulations 1990 that require continuity of final salary pension provision for "protected members" Furthermore, in many cases detrimental changes to scheme rules would require member consent and certainly consultation. We would like to emphasise that OFGEM has no power whatsoever to change the rules or benefits of any of the pension schemes and this is only a potential scenario if proposed by the sponsoring employer and consented to by the trustees and possibly members, if the rules of the scheme or legislative protection requires this. However the risk is that OFGEM could propose changes to the way costs are allowed under the regulatory formula that would negatively impact on the companies' revenue- prompting them in turn to look for savings in employment costs. Members can be assured that UNISON and the other unions are well aware of the difficulties the OFGEM review could pose for the pension schemes and good industrial relations. UNISON believes that the OFGEM pension principles continue to offer adequate protection for consumers while enabling the companies to recruit and retain skilled and competent staff in areas of skill and labour shortages. UNISON will vigorously defend member's interests as we have done successfully in other services e.g. the NHS and Local Government. Copies of the unions' submission to OFGEM will be circulated in due course.
Members are reminded that they can contact their local representative to express their views or to forward any questions. Alternatively, please feel free to email us at queries@unisoncymruwalesgas.org.uk - other contact methods may also be found at the bottom of this message.
Regards, Unison Cymru/Wales Gas
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