Unions warn of pension privatisation

Is Gillian Shephard still open to ideas on how the Teachers' Superannuation Scheme should be run or has its fate already been decided? Martyn Cornell reports.

Plans have already been drawn up to privatise the running of the Teachers' Pensions Agency, claim union officials, even though the consultation on its future still has weeks to run.

A report commissioned by the Government from accountants KPMG Peat Marwick recommended privatising the administration of the TPA, which runs the Teachers' Superannuation Scheme on behalf of 1.1 million serving and retired teachers. The investment side of the TSS would remain in public hands.

Education Secretary Gillian Shephard has asked for comments and submissions on the recommendation by March 24.

But a spokesman for the trade unions at the TPA in Darlington said they had been told by a reliable source that KPMG had already drawn up the specifications for privatising the administration of the TPA. He said: "That shouldn't even begin before the consultation is over. We've been warned that the decision to privatise has virtually already been made."

Unions at the TPA are urging individual teachers to write to Mrs Shephard to record worries they may have about privatisation. A union representative at Darlington said: "The agency has met all the targets, some quite stringent, set by the Government, and is performing very well. If any part is having difficulties it is the AVC (additional voluntary contribution) scheme, which is contracted out."

The Department for Education, however, said that while KPMG was indeed looking at the running of the TPA, which was set up in 1992 and employs 350 staff, "they are working to inform the Secretary of State's decision and not to anticipate it". KPMG's original report said that giving a contract to a private-sector company to run the administration of the TPA would "offer the prospect of substantial improvements in efficiency and effectiveness".

Teachers' unions are drafting a joint response to Mrs Shephard's request for views on the KPMG proposals, and are hoping to involve the Association of Metropolitan Authorities and the Association of County Councils in their submission. Joint action is likely with the civil service unions, who also face the privatisation of their pension scheme.

Brian Clegg of the National Association of Schoolmasters Union of Women Teachers said that unions are worried that costs would rise, benefits would fail to keep pace, and problems would take longer to sort out for both employers and teachers if the TPA's administration was privatised. The agency covers more than 3,000 employers.

Mr Clegg said: "You only have to look at the prison service to see the problems of privatisation. We believe the costs will go up not only for teachers but for the employers as well, and these costs ultimately get passed on to the council-tax payer - so the public ought to be concerned too."

The NASUWT is also concerned that the Government may be able to go ahead with privatisation without consulting Parliament. Mr Clegg said: "Our worry is that all the DFE need do is show it has consulted fully and then legislation already exists for it to put the agency's administration out to a private contractor right away."

Barry Fawcett, assistant general secretary of the National Union of Teachers, said the NUT believed that any private administrator would be driven by profit and as the TPA is a labour-intensive service, "the only way to make a profit is to reduce the levels of service to our members and the employers. We feel there are some very powerful arguments against privatising the TPA and we will push it as far as we possibly can. If that brings us into substantial conflict with the Government, so be it."

Neither the AMA nor the ACC has finalised its position on any TPA privatisation yet, though the AMA said that it would oppose "anything that represents a further erosion of accountability".

However, a company which could be one of the contenders to run the TPA said that teachers "have nothing to fear" from privatisation.

Ken Edis, managing director of UPS International, a specialist pension fund company with clients such as the Civil Aviation Authority and the House of Commons, said that teachers had "everything to gain" from seeing the administration of the TPA privatised.

He said: "The logic of putting out the administration is simply that there are specialists who can do the job better and cheaper. Very few government departments would think of servicing their own cars, they would go to a specialist garage which will have the tools and diagnostic equipment to do a better job than a non-expert. The parallel with pensions administration is just the same." Even so, he said a private company would "almost certainly" take on the staff of the existing TPA.

Mr Edis cautioned, however, that with an operation the size of the TPA, privatisation should not be rushed.

He said: "I would advocate a trial on a prototype basis to get the systems right before the whole thing is handed over. Otherwise you risk a fiasco like the Child Protection Agency."

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