Unions representing NHS employees have agreed to suspend plans for further industrial action pending consideration of the government’s “final” offer on pensions.

At a meeting this afternoon unions, including Unison and the British Medical Association, reached agreement with Department of Health officials on the principles of a deal which include concessions for staff up to 13.5 years away from retirement.

The deal, which is subject to approval by union executive councils and members, involves an improved accrual rate and the retention of the Fair Deal, the policy that provides pensions protection for staff transferring out of the NHS.

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

He added: “We have taken negotiations through as far as we think we can go within the time frame the government has allowed. We have been negotiating in good faith and the department has done the same within the time frame.

“We have been in the business of damage limitation… In the circumstances it’s the best deal we could secure through negotiation. There are still important details to be resolved and agreed.

“Our members will have to form a view once the full package is available. We have wrung as many concessions out of the DH as we believe are to be won.”

Under the deal, NHS pensions will be linked to career average earnings rather than final salary and normal pensionable age will be the same as the state pension age.

All members of the NHS pension scheme within 10 years of retirement as of April 2012 will be protected from the changes, while those within 13.5 years of pensionable age will have limited protection, tapered so that for every month of age beyond 10 years of normal pension age they lose 2 months of protection.

At the end of the protected period, they will be transferred into the new pension arrangements.

The Treasury wants to see the overall amount paid into the scheme increase by 3.2 per cent from 2012-13. There will be no increase in contributions next year for staff earning a whole time equivalent salary of less than £26,557. Those earning above the threshold will see increases next year of between 0 and 2.4 per cent. Increases for subsequent years are still up for discussion but it is likely lower paid staff will pay more.

The unions won a provisional improvement on the accrual rate from one sixtieth of pensionable earnings to one fifty-fourth each year. However, the revaluation will be at consumer price index plus 1.5 per cent instead of the original offer of CPI plus 2.25 per cent.

The agreement acknowledges that changes to pension age may have more impact on staff working in frontline and physically demanding roles, particularly the emergency services, and commits to review the impact on these groups of staff.

Responding to the progress in talks on the NHS pension scheme, Dean Royles, the director of the NHS Employers organisation, said: “This significant step forward will help lift the cloud of uncertainty hanging over the NHS around pensions and industrial action. This period of uncertainty has led to anxiety for NHS staff.  Disruption to NHS services through industrial action and has meant distress for patients.

“Suspension of industrial action gives welcome breathing space to help staff focus entirely on delivering patient care while constructive talks continue.  It will allow local employers and trade unions to explain the changes and provide reassurance on pension entitlements.”

Chair of the British Medical Association Council Hamish Meldrum said it was disappointing the government had refused to concede the pension scheme was already fair and providing a positive cashflow.

He said: “Despite some improvements to the original offer, doctors stand to be hit very hard by these changes.  Junior doctors in their twenties would have to work until the age of 68 and pay over £200,000 more in additional pension contributions.

“We will now seek our members’ views on the offer, and – if they consider it unacceptable – on what action they would be prepared to take.”

Royal College of Nursing chief executive Peter Carter said: “The government and the NHS staff council trade unions have now discussed a final set of proposals in respect of the NHS pension scheme, which recognises that the proposals are the best that can be achieved through negotiation. The government has confirmed that this is their ‘final position’.

“Each of the unions representing NHS staff will now take this proposal to their governing bodies for approval or otherwise. The RCN’s governing council will meet on 10 January to discuss this proposal and will want to engage as many members as possible in the decision over how best to respond to this offer.”