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Postponement of NHS pension contributions hike for lower paid

An extra 530,000 lower paid staff have been spared from making extra pension contributions next year after the Department of Health made a concession in the long-running pensions dispute.

The threshold for freezing NHS pension scheme contributions will be raised from £15,000 to £26,557 for 2012-13. However, higher earners will still have to pay more.

Those earning £26,558 to £48,982 will contribute 1.5 per cent more and those earning £48,983 and more will contribute 2.4 per cent more.

The DH said the number of staff spared the higher contributions would rise from 100,000 to 630,000.

A DH spokeswoman previously told HSJ only 100,000 staff would benefit from the announcement.

No details were given about contributions from 2013-14 onwards, which are the subject of ongoing talks.

The DH said the move would prevent a situation where someone earning £60,000 contributed a lower proportion of their salary to their pension after tax relief than someone earning £15,000. This problem had been highlighted by NHS Employers in its consultation response.

Health secretary Andrew Lansley said: “Having listened to staff and stakeholders, we have improved our proposals so that an extra 530,000 NHS staff will not pay any more into their pensions next year.

“Public service pensions will remain among the very best available, providing a guaranteed pension level for all employees – today very few private sector employers still offer this.  But people are living longer and pensions are costing taxpayers more and more every year.”

However, he added: “These changes alone will not be enough to ensure that NHS pensions are affordable in the long term.”

Mr Lansley said he still hoped to reach agreement with unions on wider changes to pensions by the end of the year.

The DH announcement came after between 79,000 and 400,000 NHS staff walked out on strike on 30 November.

However, Gail Cartmail, assistant general secretary of the union Unite which has 100,000 NHS members, criticised the government for its “divide and rule” negotiating strategy on public sector pensions.

She said “middle earners”, including health visitors, would still pay more and criticised ministers for “bypassing the agreed negotiating channels”.

“In its haste to sell this as good news, government is also failing to state what it plans for years two and three. It will press on as before, so this is a swindle and a short-lived one at that,” she added.

NHS Employers director Dean Royles said he hoped the move would “create an environment where we can have substantive discussions on the broader issue of pension reform”.

He said: “Hard choices had to be made and the change ensures that those staff on lower salaries, who provide a significant amount of patient contact, are protected from further costs in the second year of a period of pay restraint.”

Readers' comments (3)

  • Great even bigger increase for those on top of band 5 or above. No pay award no increment, minimum of £400 a year extra pension contributions. Well done what a wonderful concession that is.

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  • If these contribution rises go ahead, even more people will retire from the NHS early, draining even more of the non-existent pension pot. Then contributions will have to rise still further to pay for the new higher "deficit."
    It is clear that the government want to balance the money in:money out ratio of the NHS Pension scheme year by year, but this will never happen when the number of people working in the NHS drops (as it will with transfers to AWP, SE etc.)

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  • Oh dear, will HMG never learn. Do we recall what happened the last time pay was frozen ? Whe the brakes came off it exploded ! I am about to retire, am I not the lucky one. Signed I OK Fred

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