Week Starting 31st March

Age Discrimination Claims Scare For Employers

The Employers Forum On Age (EFA) has calculated that age discrimination claims could cost UK employers as much as £193 million in 2007, the first year of the legislation, unless they are properly prepared for it.

In a move it hopes will persuade employers to pull up the their socks, rather than the barricades, the EFA has also calculated employers could be exposing themselves to a staggering £73 billion worth of claims if everyone who says they have been discriminated against because of their age were to lodge a tribunal case.

The EFA, a TAEN member, has just launched a new toolkit for employers called 'One Step Ahead' which is designed to help them ensure employment decisions and policies are based on ability, not age. Consisting of 20 checklists covering a range of essential employment issues, the toolkit has been developed with some of the UK's leading companies and is sponsored by the Royal Bank of Scotland.

Companies including BAA, Manpower, Centrica, the Department of Work & Pensions, GlaxoSmithKline, Marks & Spencer and Tesco are already working with the toolkit.

Further details can be found on the EFA website (www.efa.org.uk).

RDA's Failing To Deliver

A new National Audit Office commissioned report is expected to criticise Britain's 9 Regional Development Agencies (RDAs) for failing to reduce regional economic inequalities.

The report is believed to conclude that the RDAs - who receive £2bn a year from the taxpayer - have not fulfilled their potential because of interference from central government and a shortage of skilled staff. The report, compiled
by Kevin Morgan at Cardiff University, will also call for radical changes to ensure they do deliver in future.

The RDAs have come in for a lot of criticism from business leaders amongst others. The CBI has repeatedly said its members are confused about the role of the RDAs and how their work overlaps with many other local and government funded bodies, leaving people unclear about who delivers what to whom.

Part of the RDA's agenda is local economic performance - including employment. Each of them have recently issued a FRESA (Framework for Regional Employment and Skills Action) document. These are key strategic documents as they "provide a single regional plan based on coherent, valid and accessible labour market and skills information and intelligence to promote a collaborative, proactive approach to employment and skills. They will give a focus to what need to happen in a particular region to maintain and grow a healthy labour market."

It is upon these documents that priorities, plans and funding all hang - including what they plan to do to overcome the changing labour market demographics by getting more older people into jobs.

There are even rumoured to be plans to have the Local Learning & Skills Councils report into their respective RDAs rather than into the National LSC organisation in Coventry.

We will watch development, and await the report, with interest….

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Week Starting 24th March

Ministers Contemplating Earlier Age Legislation

There is a suggestion that Ministers may be contemplating introducing the age discrimination legislation sooner than December 2006. Ian McCartney (Minister for Pensions at the DWP), writing in the latest edition of The Source has attacked "the ridiculous attitude…that means when people hit a certain age they are given their marching orders, regardless of their ability or willingness to carry on". He has asked its readers to let him know "whether we (the Government) should be looking to bring the legislation forward, and what the advantages of doing so might be." The Source is the Journal of Public Management .

We think the answer is a resounding 'yes'. The Minister needs look no further than the MOD for the reason why. The MOD has flown in the face of the Government's Age Positive programme by refusing to abolish its mandatory retirement age of 60 for its civilian workers until it is compelled to do so by the legislation. It has defended its ageist approach in the sort of terms that brings forth scorn from Ministers when repeated by other employers.

Irrespective of whether you're a reader of 'The Source' , write to or e-mail Ian McCartney at the Department of Work & Pensions with your views.

'Pathways To Work' Pilots Announced

The first 3 pilot schemes of the Government's special programme to help those on Incapacity Benefit get back into work have been announced. They will be in Bridgend in Wales, Renfrewshire in Scotland and Derbyshire.

There are over 1.3 million people aged 50+on Incapacity Benefit (IB). They do not appear on the unemployment statistics and the longer they are on IB, the less chance they have of ever getting back into work.

The 'Pathways To Work' Green Paper set out a comprehensive package to help people with an illness or disability get jobs. Its key proposals included :-

According to the Government nearly 40% (1 million) of the 2.7 million people in total on IB want to work.

Of the 3 pilot areas, Bridgend has twice the national average of people claiming IB (15% Vs 7%), Renfrewshire has 40% more people claiming IB than the national average (10% Vs 7%) and Derbyshire has the same proportion claiming as the national average.

The DWP is expected to announce further pilot areas later in the year.

MP's Pension Scheme Black Hole To be filled With Taxpayers Money

Whilst most employees who previously considered themselves lucky to be in a final salary pension scheme are worried sick about funding gaps and what the future holds, MPs are turning to taxpayers (via the Treasury) to fill a £25 million black hole in their own scheme.

The Treasury has been making reduced contributions into the MPs scheme over the past 13 years. However, it is now faced with having to increase its contributions from 8% to 24% of MPs' salaries to make up the shortfall that has appeared.

Part of the extra money will go to help fund the 25% increase in pension scheme payouts which MPs voted themselves last year.

Steve Webb, the Liberal Democrat spokesperson on Work and Pensions believes MPs should not be looking to taxpayers to fill the scheme's funding gap. He told Radio 4's 'Today' programme that MPs should make up the shortfalls themselves through increased contributions.

Last year he was the only member of the House of Commons Remuneration Committee to speak out against the increases MPs were awarding themselves. Chances are that like last year, he will be in a minority of one.

Remember the Government's consultation on the Green Paper ends this Friday (28th March). If you want to make your views known do so by visiting either the Age Positive (www.agepositive.gov.uk) or the DWP (www.dwp.gov.uk) websites.

As you may recall, the Green Paper does not propose to take any actions against employers who close their final salary schemes to either new, or existing, members. Perhaps the Treasury should take note and treat the MPs' scheme the same……

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Posted Week Starting 17th March

National Minimum Wage To Increase

The Government has announced that the adult minimum wage will rise by 30 pence to £4.50 an hour from this October. Unusually, they have also announced a provisional further rise of 35 pence to £4.85 an hour from October 2004. Both these rises are above inflation at 7.1% and 7.5% respectively.

The rate for young workers (18-21 year olds) will rise by 20 pence to £3.80 an hour from this October and provisionally by a further 30 pence to £4.10 an hour from October 2004.

The Low Pay Commission estimates that the rise planned for this October will benefit between 1.3 - 1.6 million, the following year's increase would benefit between 1.7 and 2.5 million workers.

Business leaders have issued their now customary warnings that the rises could "tip firms over the edge" and stop employers from taking on low-skilled staff. This has become a standard refrain although there is little evidence that the NMW has in fact caused any unemployment. The Government is confident the same will apply to these further rises.

The Low Pay Commission will also be looking at whether the minimum wage should be extended to 16-17 year olds.

Record Employment Figures

This month's Labour Force Survey (LFS) shows a record number of people are in work. The figure now stands at 27.815 million people and has risen by over a quarter of a million (271,000) in the past year and by 57,000 in the 3 months to January

ILO calculated unemployment is down by 73,000 over the past quarter and now sits at 1.459 million people. Those claiming unemployment benefit rose by 2,600 last month and now stands at 935,300. Over the past 12 months ILO unemployment fell by 28,000 and the claimant count over that period is down by 10,300.

According to the LFS the underlying trend in unemployment is flat. But of course the numbers do not tell the full story. Recent announcements show that skilled manufacturing jobs continue to be lost whilst the retail sector is continuing to recruit. Hardly an 'apples and apples' comparison - especially if you are one of those jettisoned from the former.

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Recruitment : Age Positive Message Slow to Get Through

When it comes to recruitment fewer than 1 in 5 employers target the over 50s, according to a new survey from the Work Foundation. Its Recruitment & Selection survey of almost 500 employers found that despite skill shortages, few organisations target applicants from less obvious labour pools such as the over 50s.

Just over a third (34%) target women-returners, 23% target job-sharers, 18% target mature recently qualified graduates and 17% of employers target the over 50s. Few encourage applications from ex-offenders (5%), people with long term health problems (4 %) or refugees (3%).

The survey pointed out that over a third of UK organisations are leaving themselves open to discrimination claims from jobseekers because they are not monitoring the diversity of external job applicants. 38% are not monitoring internal job applicants at all and over a quarter (28%) do not know if their organisations are monitoring internal applicants for race, sex and age.

The Work Foundation's Theo Blackwell commented, " Business opportunities as well as the requirements of employment law are pushing diversity up the ladder of workplace issues. More practically companies should also recognise the benefits of widening their choice of job applicants and the business opportunities that recruiting from the widest possible pool of talent can bring."

Closure To New Entrants - The Death Knell For Most DB Pension Schemes

Attendees at a Pensions Policy Institute seminar this week were advised that closure to new entrants would not be enough to save most Direct Benefit (final salary) occupational pension schemes unless there is a radical improvement in equity markets.

Closure to new entrants means that the scheme for the existing members becomes more expensive for the employer as time goes by because the amount of contributions the employer has to put in increases with members' age and service. Many employers would find that 5-7 years after closing their scheme to new entrants they would be faced with closing it for existing members as well..

Some schemes will be saved because employers and employees will agree to contribute more. However, many private sector employers currently faced with substantial funding gaps will inevitably decide to close them.

The warning came from an adviser from Legal & General. He said that many employers would like to close their schemes completely but cannot afford to do so at the moment. They are waiting till their own profitability and equity markets improve.

The seminar was called to discuss the future of the state pension and followed on from the PPI's report 'The Pensions Landscape', published in February. The report will be covered in the next Newsletter.

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Posted week starting 3rd March

Private Member's Equality Bill Gains Second Reading

Lord Lester's single Equality Bill received its second reading in the House of Lords last Friday. The Bill draws together existing and proposed anti-discrimination legislation - including that on age - and would set up a Single Equality Commission to promote, regulate and enforce the legislation. It would widen the scope of the European Directive to cover the provision of goods and services across all anti-discrimination strands.

The proposed Single Equality Commission would take over from the three existing Commissions (Commission for Racial Equality, The Equal Opportunities Commission and the disability Rights Commission) and would also deal with the newer strands of sexual orientation, religion or belief and age.

Having passed its second reading, Lord Lester had hoped the Bill would be referred to a Select Committee but it will be dealt with by a Committee of the Whole House instead.

During the debate the Bill was warmly welcomed by most of those who spoke. However, the Government has already indicated it will not support the Bill - so it stands very little chance of becoming law.

Lord Lester and other supporters appear quite sanguine about its fate. He says it represents an attempt 'to raise the Government's game' and show what could be done if only they had the will.

The Government's own separate consultation on a Single Equality Body (SEB) closed two weeks ago. TAEN was actively involved in the formation and work of the Equality & Diversity Forum - this brought together representatives from organisations concerned with the new discrimination strands as well as the existing Commissions. The Forum submitted a joint response which broadly welcomed the concept of an SEB and made recommendations to address the issues and concerns it had identified.

A Slip Of The Tongue Or The Timetable ?

Barbara Roache MP, Minister for Social Exclusion & Equality, was the keynote speaker at Help the Aged's annual lecture this week. She is also the minister responsible for overseeing the introduction of the various anti-discrimination strands of the EU Directive into UK law. Setting out her timetable the minister said the second consultation on the age strand will now take place at the end of this year. TAEN members will recall that the timing of the second consultation has already moved back twice and is now supposed to happen during the summer.

When questioned by a TAEN representative the minister told the audience she had meant to say "later this year". A slip of the tongue, or (another) slip of the timetable? Watch this space….

Inland Revenue Gathers Praise From All Sections of The Pensions Industry

Its not every day, or usually any day, you see people lining up to heap praise on the Inland Revenue. But that's precisely what happened at a 'Pensions Tax Simplification' seminar last week.

The seminar was one of a series at which Inland Revenue has been seeking feedback on its consultation document - 'Simplifying the taxation of pensions: increasing choice and flexibility for all'. This document details how IR intends to change and simplify the tax regime in order to deliver the proposals outlined in the Work & Pensions Green Paper. Both documents were published in December last year.

Speakers representing all sides of the pension's industry - including Fund managers, the FSA, Independent Financial advisers, NAPF, employers and the Occupational Pensions Advisory Service - warmly welcomed the IR's proposals to strip away the existing regulations and complexity and to introduce a single tax regime to cover all occupational and private pensions. Currently there are 8 different taxation regimes which apply to occupational and private pensions.

Their proposals were described as 'radical' and a 'remarkable simplification', they were told they had done a 'bloody brilliant job' and that 'for all but the highest paid the proposals look like a winner'.

There were criticisms of course. The proposals will do little to positively encourage people to save for a pension but by stripping out the complexity will remove its disincentive effect. There were concerns that the new pension credit scheme for state pensions might discourage lower earners from attempting to save for retirement.

The proposals will do little to halt employers shifting away from Defined Benefit (final salary) to Defined Contribution occupational pension schemes and they won't breathe life into stakeholder pensions either. The pension professionals thought that employers need to be given greater incentives to establish or maintain their schemes.

The lifetime tax free pension pot maximum limit of £1.4 million came in for a lot of criticism. "Too low" the professionals said - however raising it higher, the Revenue assured the audience, would only effect the top 1% of earners. "Index it to the rise in earnings, not the rise in prices" the Revenue were urged.

Only passing reference was made to the state pension and PPI's recent paper "The Pensions Landscape".

The pensions industry broadly seemed to support the Government's view that the new pensions tax regime should come into effect in April 2004.

Whilst the consultation on the Work & Pensions Green Paper ends on the 28th March, the consultation on the Revenues tax simplification proposals ends on the 11th April.

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Week starting 24th February 2004

Employment Credit over 50

At present people going into work or self employment with the help of New Deal 50 plus can get £60 a week top-up if their income is below £15,000 a year. 80,000 people have used this scheme since it started, of which about 8,000 have set up their own small business. In April this will disappear. It will become a tax credit which means that you may get the same money later on in the form of an adjustment to your tax and pay slip.

We think this is a thoroughly bad idea. It is much harder to understand. There are more complicated rules about who may qualify. It will be a disaster for the cash flow of new businesses. We expect the change to knock a hole in New Deal 50 plus after April 1st.

If you have experience, good or bad, of getting the Employment Credit or trying to get it, or views on this change we would like to hear from you. It will help us make the case for something better to put in its place.

Proportion of Over 50s Being Made Redundant Rising

Hopes that employers may have been adopting a more enlightened and 'age positive' approach to their restructuring / redundancy programmes in the last few years are dispelled by figures gleaned from Labour Force Survey statistics. In the twelve months to August 1997 some 680,000 people were made redundant in the UK, 21.2% of whom were men and women aged between 50 and 65. For the twelve months to August 2002 the total number of redundancies rose to 787,000 - of whom 22.4% were men and women aged between 50 and 65.

The split between older men and women has been changing. In 1997 70% of those over 50 being made redundant were men, by 2002 this figure had fallen slightly to 67.6%.