ASA Adjudication on Unison Ltd
130 Euston Road
19 September 2012
Number of complaints:
The Good Agency Group Ltd
Summary of Council decision:
Four issues were investigated, three were Upheld and one Not upheld.
Three national press ads, related to public sector strike action, were viewed in November 2011:
a. The first ad was headlined "£413 WORSE OFF A YEAR AT WORK £1,069 WORSE OFF A YEAR IN RETIREMENT". Text below included "Sandra has worked in local government for 34 years ... Sandra isn't on a high wage. Like many, her household budget is coming under severe pressure - especially as she's trying to support her daughter wherever she can. Now, Sandra is faced with having to pay hundreds of pounds more into her pension every year, only to be far worse off when she retires ...".
b. The second ad was headlined "£68 LESS EVERY MONTH IN HER PAY £18,000 LESS IN HER PENSION FUND". Text below included "Nicola has worked as a custody detention officer for 21 years. It's a vital role in local policing ... Nicola isn't on a high wage, so she is already watching every penny of her household budget carefully. Now, she's faced with having to pay money into her pension that she will never see again. It's the equivalent of a complete grocery bill every month. And it will leave Nicola with a huge shortfall against what she thought she would receive in her retirement ...".
c. The third ad was headlined "£597 WORSE OFF TODAY £1,275 WORSE OFF TOMORROW". Text below included "Tina has worked as a nurse for 27 years ... Tina isn't on a high wage and, with two children, she keeps a tight rein on the purse strings. Now she's faced with having to pay hundreds more into her pension each year, even though she'll get back less every year in retirement ...".
The complainant, Matthew Hancock MP, challenged whether:
1. the ads misleadingly implied that proposed changes to pensions would come into force, whereas discussions were ongoing;
2. the claim "£413 WORSE OFF A YEAR AT WORK £1,069 WORSE OFF A YEAR IN RETIREMENT" in ad (a) was misleading and could be substantiated;
3. the claim "£68 LESS EVERY MONTH IN HER PAY £18,000 LESS IN HER PENSION FUND" in ad (b) was misleading and could be substantiated, in particular because police pension benefits were paid out of general taxes rather than a 'pension fund'; and
4. the claim "£597 WORSE OFF TODAY £1,275 WORSE OFF TOMORROW" in ad (c) was misleading and could be substantiated.
CAP Code (Edition 12)
Unison Ltd (Unison) said the campaign appeared during the run-up to industrial action, on 30 November 2011, which was in response to proposed changes to public service pensions that affected their members in a range of jobs. They said the union had been part of extensive negotiations related to the various proposals, which had developed and evolved over that period. At the time, they judged the negotiations to have effectively stalled and therefore balloted their members on taking industrial action. Unison said that throughout that time employers and government ministers had, in documentation and in the media, presented various scenarios for how the proposals, even as they were evolving, would impact on selected case studies within their membership. The primary aim of the ads, which appeared only in the weeks leading up to the industrial action, was to use similar case studies to demonstrate that those involved in the action were ordinary people who would have to make a difficult decision to lose a day's pay in order to demonstrate against the proposals. Unison said they had chosen that approach to communicate how their members felt about the proposals and said the case studies were selected to cover some of the key public service areas that would be affected by the changes.
Unison said the ads related to case studies of actual members, whose names might have been changed. They submitted details of the members' pensionable salaries and of their dates of birth along with details of how the figures in the ads were arrived at. They said they based their calculations on the information available at the time the ads went to print and the contribution increases referred to in the ads were not necessarily calculated on the basis of a three per cent increase, which the complainant had understood to be the case, because contribution rates were tiered so the precise potential contribution would depend on member earning levels. Certain groups of earners would therefore pay a greater, or lesser, percentage of pension contribution than other earners. They said they had based the claims that Nicola would have "£68 LESS EVERY MONTH IN HER PAY" and that Sandra would be "£413 WORSE OFF A YEAR AT WORK" on the increase in the individuals' gross pension contributions pre-tax relief. They had based the claim "£597 WORSE OFF TODAY", for Tina, on the reduction in net take-home pay, however, to give balance to the collective examples and to provide the less 'dramatic' sounding figure. They said that regardless of whether gross or net pay figures were used, the point of the ads remained the same.
They also submitted ready reckoner results related to each of the case studies and to the figures stated in the ads. Unison said the ready reckoner was developed by qualified actuaries and was based on the proposals developed by the Government, which were those that were relevant at the time the ads went to press. It was available via their website at the time, so their members could calculate how the proposals would affect their pensions. They said the subject and detail of pension issues was complex but care had been taken to ensure the accuracy of the figures stated in all three ads. The figures and references had been checked rigorously by their in-house pension professionals, and pension experts would also check figures and wording before similar ads were produced in future. They said the ads correctly stated the amounts the women would have to pay if the proposed changes came into effect.
1. Unison said the ads referred to potential detrimental changes to future pension terms, including contribution increases, and the data behind the figures in the ads was based largely on publicly released information, which they submitted. They said talks between them and the Government were widely reported in the press and they disagreed that the ads implied the proposed changes would come into force; the purpose of the industrial action was to try and prevent that. Instead, they believed the ads simply referred to potential threats to pensions that were faced by typical public sector workers and explained why they were taking action.
2. Unison said that if the proposals outlined in 'approach one' of the consultation document from the Department for Communities and Local Government (DCLG), dated 7 October 2011, were to be implemented, Sandra would face paying approximately an extra £420 gross in pension contributions for the tax year 2013 to 2014 and possibly more in the following tax year; she would be at least £413 worse off. They said her pension could reasonably be expected to be £1,081 per year less if the scheme accrual rate was to change, from April 2014, from the current 1/60th to 1/68th, which was based on a design option outlined in a letter, dated 21 September 2011, from the Local Government Group (LGG) to the Secretary of State. In that instance, Sandra's pension would be at least £1,069 less per year. They said the LGG's September letter referred to "… a reduction in the accrual rate to in the region of 1/68ths", because it dealt with alternative means of the Government recouping the £900 million it sought from its LGPS members in England and Wales by 2014–2015. The LGG's proposal to move to a 1/68th accrual rate for those members with full time equivalent pensionable earnings of £15,000 or more, should members choose that option, was a purely interim measure to offset the need for some members to pay the contribution increases first announced by the Chancellor in his October 2010 comprehensive spending review. That was also made clear on the ready reckoner, which stated "LGG Option B has no increase in contributions, but reduces the accrual rate to 1/68ths from April 2014". Unison said that accrual rate was one of a number of options the independent actuaries who developed the ready reckoner advised them to adopt for member modelling purposes.
Unison said the ready reckoner result for Sandra also worked on the basis of a 1/80th accrual rate for after April 2015, which was the potential date for the new LGPS to come into force at the time the ads went to press, with the 1/68th accrual rate being used for the year 2014–2015 to help offset the contribution increases sought by the Government. They said the accrual rate of 1/80th was used for after April 2015, because that was the possible rate the Government could have considered introducing for the Local Government Pension Scheme (LGPS) at the time the ads were released. That assumption was also recommended to them by the independent actuaries. They said that was clear from the ready reckoner itself, which stated "From April 2015, the proposed scheme is assumed to be a Career Average Revalued Earnings (CARE) scheme with an accrual rate of between 1/60ths and 1/80ths, and revaluation before retirement in line with Average Weekly Earnings (AWE)". They considered those assumptions to be reasonable based on the information publicly available at the time the ads went to press.
3. Unison said Nicola was not a member of the police pension scheme but of the LGPS, which was the only funded public service pension scheme; pension benefits were paid from a fund of money administered by the relevant authority and not from general taxation. Based on Nicola's current salary, her pension contribution percentage would increase by 2.5% from April 2014 if the contribution increase proposal outlined in the September 2011 letter from the LGG to the Secretary of State was adopted. That increase would amount to an extra £68 per month in gross pension contributions by 2014–2015, or an additional £816 per year, which would equate to £18,000 over the rest of an assumed working life. Unison stressed that the LGG proposal was a potential one only, with the aim of mitigating collective concerns over the effect of the comprehensive spending review commitment. If contributions were raised by 3.2% across the board, many members would simply opt-out of the pension scheme and its future and financial viability would therefore be threatened, hence the series of alternative proposals that were put forward by the DCLG and LGG during autumn 2011.
They said the figures used were indicative and represented the likely increase in contributions by 2015. They said the Government continued to consider average contribution increases of 3.2% across the board, in line with the spending review commitment. It was conceivable as part of the current negotiations around the future of the LGPS, however, that those contribution increases could be limited by the potential bringing-forward of changes to the scheme, in order to help raise the revenues sought by 2015, without there being the mass opt-outs that contribution increases could result in. Unison said they based the ready reckoner figures on contribution tiers that meant for most of their members the contribution increase would be less than 3.2%, so as not to exaggerate the effect. The 3.2% figure was an average contribution yield increase and in effect no member would have a 3.2% increase, because any increase was dependent on their level of pensionable earnings. They disagreed that the ad was misleading and said that, by basing the calculation on a real person, they had shown an accurate figure, which was less than the Government's proposed 3.2% blanket increase.
4. Unison said that according to Tina's status and based on assumed contribution increases outlined in a Department of Health consultation paper, dated July 2011, she could expect a £597 annual drop in net take-home pay over the tax year 2014–2015. They said that if Tina was to join a 1/60th accrual rate Career Average Revalued Earnings scheme from 2015, which was the reference scheme proposed by HM Treasury in the document "Public Service Pensions: good pensions that last", dated November 2011, and her future normal pension age rose in line with increases in state pension age, she could reasonably expect her annual pension on retirement to be £1,275 less.
They said the Government had made clear that members of the NHS pension scheme would be required to pay an average contribution increase of 3.2% by 2014–2015, however, they had since set out a preferred approach, which meant there would be no increases for those that earned under £15,000, no more than a 1.5% increase for those earning up to £21,000 and that while higher earners would pay, it was proposed that any increase would be capped at 6%. Unison said the ready reckoner results for Tina showed the net reduction in her take-home pay for 2014–2015 and the potential loss in her annual pension on retirement. However, if they had based the increase on the proposed average 3.2% increase, rather than on the 2.7% increase they had used, the impact would have been significantly greater than that stated in the ad. They said the chance of Tina's contribution increases being less than the amount stated in the ad for 2013–2014 were minimal because while the government allowed discussions around specific schemes to distribute the increase in employee contribution yield, that was within strict parameters. They said the relevant discussions were about whether the high paid were paying too much, not whether the lower paid should pay less, and if the contribution for higher paid members was to decrease, then to meet the increase in yield lower paid members would have to pay more. They said they had based the proposed increases on relevant published figures and had not misleadingly implied that the effects would be greater than those proposed by the Government.
Unison said the original intention of the comprehensive spending review was to phase-in contribution increases over three years, with the intention of recouping 40% of the savings in years one and two and the remaining 20% over the third year. They said, given the comprehensive spending review commitment to consider phasing in contribution increases over a three-year period from April 2012, they believed it was entirely appropriate to extrapolate likely 2012–2013 increases, as implied by consultation, and project them to future years, based on the likely split identified in the spending review. Unison said members wanted to know how much more they were likely to have to pay in total and their contribution calculation was entirely consistent with the likely direction of travel, based on publicly available information. They said the ad stated that Tina had worked as a nurse for 27 years, which was correct. She had, however, accrued only 23 years of pensionable service, due to having had a four-year career break to raise a family. They said that was common amongst their majority female membership and the figure in the ad was correctly based on Tina's years in the NHS pension scheme.
1. Not upheld
The ASA noted the ads included absolute claims that related to potential costs to the women featured in the relatively near and more distant future. We also noted, however, each ad also included text that stated they were "Now … faced with …" those additional costs, which we considered, particularly in the context of ads that discussed industrial action that had also received widespread news coverage, made clear that the changes the ads referred to were potential changes only. We considered readers were therefore likely to understand that the changes the ads referred to were under continued discussion at the time they appeared. We concluded that the ads were not misleading.
On this point, we investigated ads (a), (b) and (c) under CAP Code (Edition 12) rules 3.1 and 3.3 (Misleading advertising) and 3.7 (Substantiation) but did not find them in breach.
2., 3. & 4. Upheld
We considered readers were likely to understand that the changes the ads referred to were under continued discussion at the time they appeared. We noted, however, that the ads made particular reference to financial sums and that those absolute claims were not qualified with any explanation of how they were calculated. We considered the claims were likely to be interpreted as relating to the costs the women in the ad would incur if the changes proposed by the Government came into effect.
We noted the information Unison submitted and that the ready reckoners included results that, according to the information that had been entered, stated that Sandra would have a £420 pension contribution increase, before tax relief, in the tax year 2013–2014, which we understood was based on an option outlined in the October 2011 consultation document from the DCLG. We understood the claim "£413 WORSE OFF A YEAR AT WORK", which we noted was not the same as the increase referred to in the evidence, was based on that contribution increase. We also noted the claim that Sandra would be "£413 WORSE OFF A YEAR AT WORK" was based on her gross pension contribution pre-tax relief. We considered, however, in particular because it stated that Sandra would be "£413 WORSE OFF A YEAR", the ad was likely to be interpreted as relating to her net take-home pay, which we noted the ready reckoner stated would be reduced by £336 for the year 2013–2014, rather than by £420.
We noted the ready reckoner stated that the estimated reduction to Sandra's annual pension, at the age of 65, which we understood was based on a proposal outlined in the September 2011 letter from the LGG to the Secretary of State, was £1,081. We understood the claim "£1,069 WORSE OFF A YEAR IN RETIREMENT", which we also noted was not the same as the reduction referred to in the evidence, was based on that annual reduction. We noted the ready reckoner stated that the accrual rate selected as the basis of that reduction to Sandra's pension was 1/80th, which Unison said was used for after April 2015, but that they said an accrual rate of 1/68th was used for the tax year 2014 to 2015 to reflect one of the interim options, outlined in the LGG letter. We also noted, however, the consultation document from the DCLG outlined scenarios for making savings, including by reducing accrual rates, but that it did not refer to any reduction beyond 1/69th and did not indicate that the accrual rate for after April 2015 was proposed to be 1/80th. We also noted that 'approach one' in the DCLG document suggested reducing the accrual rate to up to 1/65th but not beyond that. We acknowledged that the calculations for the ready reckoners were based on recommendations made by independent actuaries but were nevertheless concerned we had not seen any evidence that a reduced accrual rate of 1/80th, which the claim "£1,069 WORSE OFF A YEAR IN RETIREMENT" was in part based on, was intended from April 2015.
We were also concerned that the contribution increase and annual pension reduction referred to in ad (a) were based on two different options, rather than relating to the effect that whichever option was adopted, if any, would have both on Sandra's annual income, as a result of pension contribution increases, and on her annual pension in retirement. For example, we noted the LGG letter stated that a reduced accrual rate was proposed as an option for members of the pension scheme who did not wish to make increased contributions but, we understood, it was not intended that members would make increased contributions as well as having a reduced accrual rate. We noted, for example, that the ready reckoner stated that LGG 'option B', which the reduction in annual pension figure in the ad was in part based on, would mean no increase in pension contribution for Sandra. We noted the claim "£413 WORSE OFF A YEAR AT WORK" was based on Sandra's pension contribution increase for the year 2013–2014 and that the claim "£1,069 WORSE OFF A YEAR IN RETIREMENT" related to a reduced accrual rate for 2014–2015 and a different further reduced accrual rate from after April 2015. We considered, however, particularly in the absence of qualification, the ad was likely to be interpreted as suggesting both scenarios would affect Sandra simultaneously and that she would therefore be £413 per year worse off, for years to come, and would also have £1,069 less in her pension.
In relation to ad (b), we noted the relevant ready reckoner stated that Nicola would have an £816 annual pension contribution increase, before tax relief, from the tax year 2014–2015, which the evidence stated related to 'option A' of the proposal outlined in the letter from the LGG to the Secretary of State. We understood the claim "£68 LESS EVERY MONTH IN HER PAY" was based on that contribution increase. We noted the claim "£18,000 LESS IN HER PENSION FUND" was based on the cost of that increase over an assumed working life. We also noted the claims that Nicola would have "£68 LESS EVERY MONTH IN HER PAY" and "£18,000 LESS IN HER PENSION FUND" were based on the cost of her gross pension contributions pre-tax relief. We considered, however, in particular because it stated "… IN HER PAY" the ad was likely to be interpreted as relating to her net take-home pay, which we noted the ready reckoner stated would be reduced by £653 for the year 2014–2015, rather than by £816. We understood the £653 reduction in net take-home pay would equate to approximately £54 less per month and therefore, based on Unison's calculation, which took into account the number of years Nicola was expected to continue to work, approximately £14,404 less overall, rather than £18,000. We understood, however, that although Nicola's take-home pay could be estimated to be reduced by £14,404 over the remainder of her working life, multiplying the cost of her annual pension contribution increase by the number of years she had left to work would not directly equate to a corresponding £14,404 deficit in her pension.
We noted the evidence that related to Tina stated she would have a £597 reduction in take-home pay, after tax relief, for the tax year 2014–2015 and that the estimated reduction to her annual pension, at the age of 60, which we understood to be her current retirement age, was £1,275. We understood the figures in ad (c) were based on assumed contribution increases outlined in a Department of Health consultation paper. While we acknowledged that Unison considered it reasonable to extrapolate to the following years, based on the comprehensive spending review, we noted that the consultation document related to proposed increases for the tax year 2012–2013 only, for which the ready reckoner results stated the reduction in Tina's take-home pay was predicted to be £265. Although we acknowledged that readers were likely to understand that the changes the ads referred to were under continued discussion at the time they appeared, we considered, in particular given the absolute and unqualified nature of the financial claims, the ad was likely to be interpreted as suggesting the costs stated in the ads would be incurred by Tina if the changes proposed by the Government came into effect. We noted the consultation paper expressly stated that further, separate discussions would be held in relation to increasing contribution rates in 2013–2014 and 2014–2015 as well as to longer-term reforms to public sector pension schemes. Because we understood discussions that related to future contributions for NHS pension scheme members were continuing at the time the ad appeared, and because we had not seen adequate evidence to demonstrate that the proposal being considered at that time was such that it was acceptable to extrapolate the ready reckoner results, we considered the ready reckoner results were not relevant to the tax year 2014–2015 and that the claims about the financial implications for Tina had therefore not been substantiated.
For the reasons given, we considered the evidence Unison submitted did not substantiate the claims about the financial impact the proposed changes would have on the women in the ads. We therefore concluded that the ads were misleading.
On these points, ads (a), (b) and (c) breached CAP Code (Edition 12) rules 3.1 (Misleading advertising) and 3.7 (Substantiation).
The ads must not appear again in their current form. We told Unison to ensure they were in a position to substantiate future objective claims.