The Immoral Dimension
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Also take a look at "How it is done"
Civil Servants who retire to a "frozen" country get special treatment which partly exempts them from the "freezing" regime. This treatment is also available to Members of Parliament, judges, and many other public sector employees.
The clue to this "rort" first appeared in the magazine of the Civil Service Pensioner Alliance. It referred to retirees living in frozen countries.
A word of explanation. The GMP is not an extra pension, but is part of the pension from the occupational scheme. All contracted out schemes had to provide such a pension for service prior to 1997. The rules have since been changed, but GMP still exists for present and future pensioners if they were in an occupational scheme before 1997.
The GMP is not usually indexed by the scheme. Instead, the DWP calculates the amount of indexation and pays it with the state pension. Sounds crazy, but that is the way it is done.
Pensioners who live in a "frozen" country do not get the indexation of the GMP from the national insurance fund. The state promises that they will, but the state turns its back on its promises. However, if they are public sector pensioners, they get it from the pension scheme instead.
This was confirmed by officers of the DWP;
We have liased with colleagues in the Cabinet Office which has responsibility for Civil Service Pensions. Cabinet Office have confirmed that the article that appeared in the Civil Service Pensioners Alliance magazine is correct in stating that where a civil servant moves permanently abroad to a country with no reciprocal arrangement, the Principal Civil Service Pension Scheme takes responsibility for paying the GMP element uprated in line with inflation."
It is evident from this reply that the writer was previously unaware of the special arrangements, and had to ask colleagues at the cabinet office. The next writer also, it seems, was previously unaware, and had to ask colleagues in the Treasury
A further enquiry to the same source elicited the following
We then asked a Member of Parliament, one who happens to be on our side. He is the Liberal Democrat spokesman on pension matters. Here is an extract from Hansard.
This is all done in secret. Most civil servants will be unaware of it.
And this is how it was done.
It was accomplished by passing a special Act of Parliament. The Social Security Pensions Act of 1975 contains, in Section 59 (dealing with "offficial pensions") an instruction that the GMP component is not to be indexed by the scheme. It is indexed by the National Insurance Fund, as explained at some length in a Treasury document we found on the Internet. But this same document reveals that, when they found that some of their own would be affected by freezing, they added another section to the Act, section 59A, which overrides Section 59. This section is not in the copy of the SSP Act in our possession.
The document gives full details of the procedures used to bring about what Mr Alexander revealed in the above answer.
Members of parliament enjoy the same privileges, as do judges and many other public sector pensioners.
This is hypocritical. Top civil servants in the DWP advise the Minister on the continuation of the freezing regime. Like Sir Humphrey Appleby, they see no inconsistency between what they advise and what they enjoy. And the Minister, just like Jim Hacker, has his snout in the same trough.
This is the "Immoral Dimension"
In later correspondence from the Cabinet Office, they have suggested that private sector schemes could extend the same treatment to their pensioners. When challenged, the only scheme they could cite is the British Telecom pension scheme. In doing so, they overlook the fact that BT is a privatised operation, which took over all the pension conditions for the employees it took over from the government.
Sir Richard Mottram (the current "Appleby" of the DWP) wrote:
I have no idea whether what you say is or is not correct. I do not spend any of my time investigating the small print of the PCSPS. (Principal Civil Service Pension Scheme).
So he does not know that he himself is a beneficiary.
For an example of how BAPA fought on behalf of a local government retiree, seePublic sector pension victory