Employers tells DH to make pensions plans more 'progressive'

The recommendations have been put forward as NHS staff are being asked to decide whether or not to strike over the government’s proposed changes to the pension scheme.

As part of a major review of public sector pensions, the government has said it wants to raise contribution rates, increase the retirement age and scrap final salary schemes.

But NHS Employers has highlighted that current plans would see those on £25,000 salaries paying a higher proportion of their income, after tax, than those earning £60,000.

It has suggested a more “progressive” option that would still meet the government’s remit of finding savings equivalent to an overall 3.2 per cent uplift in contributions.

The redistribution would result in 48 per cent of NHS pension scheme members paying nothing extra next year, compared with 7.5 per cent under DH plans published in September.

The document also contains results from a survey of NHS Employers’ members attracting 98 responses, of which 67 were deemed “credible”.

This revealed an “anxiety” that the government’s pensions plans would encourage highly skilled staff to “choose to retire early leaving gaps in skills, knowledge and experience in the workforce which would not be easy to replace”.

It added: “These staff will also take with them strong leadership qualities which employers say is essential at a time of such uncertainty and change.”

The current plans could also mean lower earners decide against saving for pensions, it warns. The current level of opt out from the NHS pension scheme is 15 per cent but by providing a greater financial cushion for lower and middle earners this could be reduced, it says.

In a letter sent to human resources directors late this afternoon, seen by HSJ, NHS Employers director Dean Royles said: “Representing your views, we recognised that the government intended to introduce increased NHS Pension member contributions and, from an employer’s perspective, it was important that this was done fairly and in a way that protected low earners while at the same time minimised opt outs from the scheme.”