Labor Party Consultation on DB Scheme Shutdown – DB & Derisking
In a letter seen by Pensions Expert dated March 30, 2022, which was sent by the Labor Party Superannuation Society Trustee to retirees and deferred plan members, beneficiaries were advised that the party “proposes to close the society to new members and to stop future regularization”.
“This means that from dates yet to be confirmed, new members of staff would not be invited to join the society and active members would cease to contribute and build up additional pension in the LPSS,” the letter said.
Labor is holding two 60-day consultations on the issue. The first began on March 29 and concerns the closure of the DB scheme to new affiliates. The second consultation, due to begin in May, will focus on closing future accumulation for current active members.
The letter said that following consultations, “the party will consider all representations made by staff and decide whether to move forward with its proposals to close the society to new members and future buildup.” .
He assured pensioners that they would continue to receive their pensions as normal, with the party’s proposals not affecting the amount and speed of their pension payments.
She also confirmed that her plan would not change the amount of a deferred pension, or when a beneficiary could receive their pension.
Tom Peters, a recipient of the letter who worked for the party from 2016 to 2020 on its work and pension and shadow cash teams, described the proposals as “a real disgrace”.
‘Labour really should be delivering the best possible policy to its employees as a party that seeks to build a better settlement for working people more generally,’ he said.
“The party pursued a sort of active choice, both to alienate some of its biggest backers via the labor movement, and also to actively downsize its membership, which was another source of its revenue. .
‘And unfortunately under that leadership it caused them to put themselves in a pretty dire financial situation, very, very different from where they were under the previous leadership, where Labor actually had quite significant financial buffers’ , Peters continued.
“It seems to me that they are asking their staff to pay for the active decisions made by their own management.”
Labor has been approached for comment.
In 2020, Labor recorded a loss of £1million in its accounts, compared to a slight surplus the previous year.
Donation income rose from £18.1m in 2019 to £5.7m the following year. Donations had surged in the 2019 election year under Jeremy Corbyn’s leadership, rising to £5.8million in 2018.
However, member income fell from £16.5m in 2019 to £19.3m in 2020.
The party’s balance sheet, meanwhile, recognized a deficit of £1million linked to its DB scheme at the end of 2020, compared to a surplus of £2.46million in 2019.
“The significant reduction in our short-term cash allocation due to a poor result in the 2019 general election was also strongly felt during the year,” its 2021 annual report said.
“Despite a membership record during the period, for the first time in almost 15 years, an unforeseen deficit was recorded.”