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Health leaders slam pension change plans

by Lalah-Simone Springer
12 March 2014

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Plans to increase the amount of pension contribution NHS staff pay has been slammed by trade union, royal colleges and frontline staff. 

In response to a government consultation about plans to increase current levels of contribution, Unison said the increases were devised to “counteract the effect of the financial crisis”. 

However, the government said “this was not [their] intention”. Instead, the hope was to counteract the fact that the pension benefit individuals are receiving is increasing due to people living longer – the cost of which has been met by taxpayers. 

The official response states: “The increase in member contributions is designed to create a fairer balance between what employees pay and what other taxpayers contribute towards a public service pension.” 

The consultation has proposed: 

 – To introduce new scheme access requirements for Independent Providers of NHS clinical services.

 – To introduce pensionable pay controls across both Independent Providers and other NHS employing authorities, to limit excessive pay rises that would otherwise distort final salary benefit calculations.

 – To enable interest and an administration fee to be charged on late payment of contributions by both Independent Providers and other NHS employers. 

 – To apply increases to member contribution rates required by Government from 1 April 2014. 

 – To accommodate HMRC Lifetime Allowance tax charge protection. 

But the British Medical Association (BMA) said it is “disappointed” that the government has reneged on reforms which were negotiated in 2008. 

According to a BMA statement: “The NHS Pension Scheme [was] already yielding large savings for taxpayers and were estimated to reduce the future costs over the period to 2060 by £67 billion. 

“The blanket approach to change ignores varying stages of reform and different funding profiles of the public sector pension schemes, particularly the NHS Pension Scheme.” 

In the document, the government claimed that previous reforms have been “insufficient to reverse the increasing costs associated with rising longevity”. 

The response stated: “The government’s view is that the 2008 reforms to the NHS Pension Scheme did not allow for the costs of increases in longevity to be managed fairly or sustainably.” 

Concerns were also raised that increasing contribution rates would become “unaffordable” for NHS employees. 

Many respondents warned that members opting out in large numbers would threaten the scheme overall. 

And comments from GPs and hospital consultants which claimed that high earners contribute disproportionately more than lower earning colleagues were dismissed out of hand by the government. 

“The government does not accept suggestions that the distribution of increases is unfair… to higher earners. The department’s objective in setting contribution rates is to make adjustments for this so that the outcome is fair across members.” 

The full government response is available to view on the Department of Health website