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Signs of a fairer deal on NHS pensions

It’s been almost all bad news for doctors on the government’s changes to the NHS pension scheme over the past 18 months.

And so the latest response to the BMA from health secretary Jeremy Hunt, opening up the potential for a much flatter contribution structure post 2015, is a significant milestone in our campaigning.

There has been a lot of activity on NHS pension changes over recent weeks, not least 2,500 BMA members responding to our call to write to their MPs to urge them to make amendments to the Public Service Pensions Bill (for which, thank you!).

The Bill, which brings together all of the public sector pension schemes under one legislative framework and enshrines the Government’s major structural changes, is currently going through its Commons stages. We’ve published a new analysis of the unfairness in the government’s approach to public sector pension reform, I’ve met the health secretary twice since his appointment in September and I’ve given evidence to MPs scrutinising the Pensions Bill.

While MPs on all sides appear unwilling to oppose the main thrust of public sector pension reform, I’m aware from my own meetings in and around Westminster that our combined lobbying is drawing interest. There is a growing awareness that doctors’ anger is not just going to go away and that the NHS and its staff are bearing a big burden in the response to the UK’s economic crisis – whether that’s through pension changes, pay freezes or efficiency savings.

Now, directly in response to our most recent pensions analysis, the health secretary has said he is to bring forward discussions on post-2015 contribution rates that were originally scheduled to begin next year. He also announced that, while the overall cost envelope for staff contributions remains unchanged, the government has not made any decisions about the contribution rates across salary levels from 2015. Instead, he says he expects NHS employers and trade unions to make recommendations ‘to be reached transparently, taking account of actuarial advice, and based on an agreed set of principles that is reasonable and fair to all staff’.

2015 is when the NHS final salary scheme will close (except for those within ten years of retirement, who are protected). This means the vast majority of NHS staff will then be in a career average revalued earnings (CARE) scheme, with a more even correlation between salary and pension for staff at all levels. We have argued that in a CARE scheme, aside from needing to protect the lowest paid and to reflect higher rate tax relief, there is no justification for ‘tiered’ contribution rates – i.e. staff on different salaries paying different proportions of their salary in contributions. Importantly, the health secretary says that these are ‘reasonable’ points that should be taken into account.

Of course, this isn’t by any means a government U-turn and there are still big problems with the current plans. These include the steep contribution rises due in April 2013 and 2014, as well as the linkage from 2015 between the NHS scheme and the state pension age, which is rising to 68. The Treasury also continues to put up a brick wall against any attempts to engage in a debate about fairness in the approach across all public sector schemes.

But with the opening of the Department of Health consultation on April 2013 pension contribution increases, the continuing parliamentary journey of the Public Service Pensions Bill and the Working Longer Review just underway – on top of the, now, more promising talks on post 2015 contribution levels – we have some clear opportunities for the next phase of our campaigning and lobbying activities.

And the role of individual doctors in making sure the profession’s voice is heard will be more important than ever.

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One Response to “Signs of a fairer deal on NHS pensions”

  1. Mark KM says:

    Unfortunately the government has a much better plan to reduce our pensions in real terms by constantly freezing our pay. High levels of inflation mean a years contributions are largely wasted as leaving the pension scheme would result in automatic inflation increases in our pension pots anyway !! Consultants should all leave the scheme whilst our pay is frozen (can always rejoin under present rules) and the goverment would then have to find the money to fund the shortfall!!
    Add in the cap on contributions (about to drop in budget next week??) and you realise our gold plated pensions are no more!

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