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Pensions agency fears privatisation

Staff at the Teachers' Pensions Agency (TPA) are angry that the Government is pressing ahead with plans to privatise the administration of the superannuation scheme even though consultations have revealed that the profession is strongly opposed to the move.

As David Blunkett, Labour's education spokesman, said last week, only three of the 131 responses the Department for Education received in the three-month consultation process were from organisations or individuals who favoured contracting out.

Bernie Williams, north-east regional officer of the Civil and Public Services Association, the union that represents most of the 400 Darlington-based TPA staff, reinforced the argument this week by pointing out that the only people in favour were a small employer, an individual teacher and a potential contractor. "It is hardly surprising that so few were in favour of privatisation because the TPA has been a remarkable success and has consistently exceeded its efficiency targets," he said. "It has even won a crystal award from the Plain English Campaign for the clear wording of its publications.

"I have just attended a packed TPA staff meeting and our members were very annoyed and disappointed. They are going to redouble their efforts to save the agency by lobbying MPs and we will look at the options for industrial action. We will, however, only go down that path as a last resort."

The TPA, a satellite of the DFE that was set up three years ago, is reducing its costs by 7.5 per cent during each of the next three years. Nevertheless, KPMG, the accountancy firm that has produced a report on the agency for the Government, believes it is possible to cut costs still further over the next five to seven years by introducing "commercial disciplines and more flexible terms and conditions".

Staff at the TPA, who run the scheme on behalf of 1.1 million serving and retired teachers and 3,000 employers, fear that this will inevitably mean job cuts. The Government said last week that the staff's contracts of employment would automatically transfer to any new contractor. However, it has not denied that there could be job losses or that the administration of the scheme may eventually be moved out of Darlington. "It is likely that the staff of the former TPA would continue to administer the scheme, at least in the early stages of the contract," a DFE spokesman said. "Over time, the contractor might wish to bring in staff from other parts of his business to work on the scheme; and to transfer some staff from administration to other areas of his business. "

Darlington's business and council leaders are deeply concerned about the jobs threat as the TPA and the DFE are two of the town's biggest employers. The Department has 500 staff in Darlington and as many of them provide support for the TPA their jobs also appear to be in jeopardy.

The jobs threat is not all that is worrying critics of the privatisation plan, however. Many of those the Government consulted were concerned that a private contractor would offer an inferior service and compromise the confidentiality of the scheme's members. Some have also argued that a contractor might try to sell financial services to teachers and have pointed to the recent controversy over the Prudential's handling of the additional voluntary contributions scheme.

There is also concern that scheme members might find it hard to obtain redress from a contractor for poor service or maladministration and a more general worry that an outside firm would find it very difficult to master the complex rules and regulations that govern a statutory pension scheme.

The DFE insists, however, that these fears are unfounded, and unless the TPA supporters can achieve a rethink, there is every likelihood that ministers will sign a deal with a contractor next Easter, and that the agency will be wound up by the end of next year.

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