The James Hutton Institute is gearing up to begin negotiations with unions, as it proposes closing its career average scheme in favour of a defined contribution arrangement.
Unions have in recent months begun to fight for more generous DC arrangements where defined benefit schemes cannot be kept open, but employers should not expect an easy ride when shutting DB schemes.
We are particularly concerned about the institute’s proposals to move away from its DB scheme
Ian Perth, Prospect
The James Hutton Institute, for agricultural research, uses a career average setup at the moment through Joint Superannuation Services, which administers both the Research Councils Pension Scheme and the Principal Civil Service Pension Scheme.
Civil service pension changes
Changes to the pension arrangements are part of wider change in employment contracts. Many employees use the same terms, conditions, contracts and pension arrangements as are used by the Biotechnology and Biological Sciences Research Council.
However, employees hired by the institute since 2014 have been brought in on in-house contracts, with 15 per cent of employees now part of such arrangements.
In a statement, the institute said it was making the changes to take charge of its own arrangement.
“The 2014 terms and conditions have been defined by the institute to meet their needs and place the Institute in charge of what is offered, rather than perpetuating the use of third-party, nationally-negotiated, ‘one-size-fits-all’ arrangements over which we have no influence,” it added.
The institute described the new DC arrangements as “generous”, but would not provide further details as it is about to start negotiations with Prospect, the union.
The RCPS is working on reforms to its scheme and administration at the moment, which the institute is trying to pre-empt with its own pension changes.
Members of the RCPS are expected to transfer to the civil service pension arrangements before March 31 2018. This is to be followed by the closure of both the RCPS and JSS.
All institute staff are being given the option of independent advice as part of the process.
Offering a competitive package
Ian Perth, negotiator with Prospect, said: “We’ll begin formal negotiation on the proposed changes shortly. We have a strong working partnership with the institute and we hope that we can come to an agreement that is acceptable to all sides.”
“While we note the challenges that nationally agreed terms and conditions can present an institution like the James Hutton Institute, there are also significant benefits in ensuring members are rewarded appropriately and competitively compared to their peers across the UK," he said.
"We are particularly concerned about the institute’s proposals to move away from its defined benefit pension scheme.”
A trying time
Anne-Marie Winton, partner at Arc Pensions Law, said negotiations could be a trying time if members feel they were promised a certain type of pension and find it is being taken away.
Closure cases: How trade unions are changing tack
It is not uncommon to hear of trade unions stepping in to protect DB provision for members, as final salary schemes continue to close. But with a greater focus on DC adequacy, union approaches to closure cases are evolving.
“There’s a fear that members may say from their perspective there’s a promise of continuation of career average,” she said. “If you think people may have a belief they have a valuable promise, the one time you will know is when you try to take it away.”
She added that a change in benefit structure would in most cases require the consent of the trustees.
“They will have to make the case [to the trustees] that it’s necessary to do it,” she said.
