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The pension schemes that have been raided are final salary schemes. Some of these were old schemes that have otherwise been closed to new members (e.g. some dating back to when shipbuilding and steel were nationalised industries). The only final salary scheme open to most Napo members is the local government pension scheme (LGPS), one of the safest anywhere.
If, for example, a CRC owner was in trouble, and started to try and save money by not meeting the employers’ contribution to the LGPS, the pension scheme managers (GMPF in probation and West Yorkshire in the FCS) would notice and alert us and their trustees. For good measure, Napo is in regular conversation with both, in particular the GMPF and ask for periodic reports on failures to make contributions. To date the only significant problems have been with the NPS where HR processing continues to be chaotic.
Napo also recognised the risk of a CRC owner going bust prior to the probation split and pressed on this issue – leading to the additional protection of a secretary of state’s pension guarantee meaning that the MoJ is additionally committed to meeting any possible shortfalls in full.
Dean explains: “We have many concerns about the risk of one of the CRC owners doing a Carillion. The parallels are obvious. However, the pension risk is one we can offer reassurance on mostly because we’ve been on to it from the start of TR.”
However, Napo does have some concerns about CRC staff if an owner went bust. “When Carillion went the MoJ was quick to reassure their staff in prisons that they would make sure they were paid and secure their jobs. In all honesty they couldn’t offer the same reassurance to NPS staff as they can’t guarantee their existing staff are being paid right every month now. They have very limited capacity to absorb a failing or failed contract – undoubtedly one of the key reasons why they keep throwing more money at the contracts to keep them going,” he added.