NHS pensions will remain a “proper reward” for a lifetime of public service, chief secretary to the Treasury Danny Alexander has told parliament.
Mr Alexander said a heads of agreement deal had been reached with the public sector unions, subject to approval from members, and both sides had agreed it was the best outcome that could be achieved through negotiation.
The agreements will see the pensionable age for public sector staff aligned with the state pension age and final salary schemes replaced by career average schemes.
Schemes for different groups of public sector employees vary slightly, but all have agreed to an improved rate of accrual - the rate at which pensions benefits are built up. This has been offset by a lower level of revaluation, which will in future be in line with the consumer price index rather than the retail price index.
Mr Alexander said: “We and the unions agree that this is the best outcome that can be achieved through negotiation. For our workforce, it means they will continue to receive the best quality pensions available in this country. This is a proper reward for a lifetime’s commitment to serving the public.
“These agreements deliver the government’s key objectives in full, and do so with no new money since our November offer. These reforms will save the taxpayer tens of billions of pounds over the next few decades and significantly improve the long-term fiscal sustainability of this country.
“This is a fair deal for public service workers, an affordable deal for the taxpayer, and a good deal for the country.”
Unions must now take the terms of the deal back to their members for consideration.
At the beginning of November the Treasury increased the size of the pot on offer by 8 per cent on condition that agreement was reached by the end of the year.
The government has committed to retaining the Fair Deal policy which offers pensions protection for staff transferring out of the NHS if the pensions deal is agreed.