Unions are warning their members they will need to be prepared for a sustained period of industrial action if they reject the government’s latest and “final” offer on the NHS pension scheme, HSJ understands.

The deal was announced the week before Christmas. It stated that from 2015 NHS pensions will be linked to career average earnings rather than final salary and the normal pensionable age will be the same as the state pension age.

Unions won an improvement on the accrual rate, which determines the proportion of the pension fund paid out annually, from one sixtieth to one fifty-fourth. In exchange the amount at which the pension is revalued annually was reduced from consumer price index plus 2.25 per cent to CPI plus 1.5 per cent.

Protection to mitigate the effect of the changes has now been extended to staff 13.5 years away from retirement (see box, below).

All unions except Unite have accepted the deal is the best that will be reached through negotiations. They will now take it back to union executive councils and consult with members before deciding whether to agree it.

They have committed to suspend the threat of industrial action in the meantime.

HSJ understands it is likely to take until the end of January before they reach a decision.

One union source told HSJ: “All of the unions will be saying to their members, ‘If you reject it you have to be prepared for sustained industrial action.’”

Managers in Partnership chief executive Jon Restell told HSJ the deal was the government’s “final position and therefore would be considered as such by the unions”.

“We have wrung as many concessions out of the DH as we believe are to be won,” he said.

NHS Employers director Dean Royles said the agreement to suspend the threat of industrial action provided an opportunity to work with staff and explain the implications.

He added: “We have got 15 trade unions in the NHS. It’s a significant step to get to this point with the different anxieties of their members.”

The government’s final offer

All staff earning more than £26,577 will pay increased contributions of up to 2.4 per cent from next year. Contribution rates for subsequent years have still to be agreed.

All existing benefits accrued will be protected, meaning all employees already paying into the existing NHS pension will essentially have two pension pots on retirement.

Employees more than 13.5 years from retirement will move on to the new career average scheme from 2015 and their retirement age will be brought in line with the state pension age.

Staff retiring in 10 years or less will be completely protected from the change, remain in the final salary scheme and keep their existing retirement age. Employees between 10 and 13.5 years away from retirement will receive limited protection, losing two months of the scheme for every month of age beyond 10 years of pensionable age.

For example, an employee who has just turned 47 and so is 36 months outside the cut-off for full protection would lose six years of the maximum 10-year protection and join the career average scheme in 2016.

From 60 onwards, they would be eligible to draw their pre-2015 pension linked to their final salary on retirement alongside the career average pension, although if they drew the latter before state pension age it would be reduced accordingly.