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Nurses face paying hundreds more into pensions

  • 21 Comments

Nurses face paying hundreds of pounds a year into their pensions after the government unveiled proposals to shore up the NHS pension scheme which have resulted in fury from the nursing unions.

The announcement comes as nurses have had their pay frozen until 2013, face having to work until their late 60s due to proposals to extend the retirement age and are battling attacks on pay increments.

At the same time, they are being hit with higher energy bills, rent rises and inflation (see above) as the economy stalls after the banking crisis.

Now the Department of Health has released a consultation proposing that staff should contribute up to 28 per cent more towards their pensions from next April, rising again in 2013-14 and 2014-15.

The average nurse, earning £34,600, would pay 18 per cent more in 2012-13 under the plans.

After tax relief is taken into account, a staff nurse earning £25,000 must pay an extra £120 a year, while a nurse consultant earning £60,000 would pay an additional £720.

Above this, contributions rise further so that a board director on a £130,000 salary will pay an additional £1,824.

Royal College of Nursing general secretary and chief executive Peter Carter said: “Hard working nurses are in the middle of a two year pay freeze, inflation is soaring and they now face the prospect of paying more money into their pension next year for no additional benefit.

“This latest development is not just about contributions in 2012. It is the start of a process that will increase contributions even further and make nurses work until they are dropping on their feet. All this is likely to have a devastating impact on the morale of dedicated nurses.”

He added: “This is not a fight the government needs at this time.”

Despite paying more it is likely that nurses will receive a less generous pension in future.

Currently, NHS staff pay between 5% and 8.5% of their salaries towards their pensions, with higher earners paying a bigger proportion of earnings. In return, employers pay a further 14%.

But the government wants to save £2.3bn in 2013-14 and £2.8bn the year after from public sector pension schemes, requiring each sector – including the NHS – to raise staff contributions by 3.2 percentage points.

It has said that anyone earning under £15,000 will not have to pay more, but Unite lead nursing officer Barrie Brown said this would apply to few, if any, NHS workers once additional payments such as London weightings were taken into account.

The government has also indicated it wants to replace final salary pensions – favouring those whose salaries shoot up as they near retirement - with a scheme based on members’ average earnings across their whole career.

Plans to raise the retirement age from 65 to 68 by 2046 are also part of the negotiations that unions say have been pre-empted by the DH’s announcement on contribution rates.

Mr Brown expressed anger that the government had pre-empted the result of talks which could have seen higher contributions been negotiated. He asked: “What are we going to be able to negotiate on now?”

A statement released on behalf of unions including Unison and Unite said the announcement “seriously undermined” the discussions. “It will be extremely difficult for unions to consult members over these proposals when they will not know the possible increases in contributions due in 2013 and 2014 and before we have even started negotiations on possible further reforms of the NHS scheme,” it said.

A Department of Health spokesman said the measures needed to be seen in the context of predictions that the value of the NHS scheme, which now stands at £1.6bn, would drop to £150m by 2015-16 if no change was made.

  • 21 Comments

Readers' comments (21)

  • I actually gave the advice to the poster regarding taking his/her money now. Until April, I worked for the NHS, but our service was privatised. Many of us had special status where we could retire at 55. One girl did and it was the best thing she ever did. Three didn’t and now they’ve found out that once you’ve been privatised you can’t touch your money until you’re 65 as your pension fund is frozen and you cant continue to contribute to it as you’re no longer an NHS employee. I’m in the position where I have 25 years of NHS pension sitting doing nothing. I’ve tried to transfer it to a private fund, but was encouraged not to as I would loose so much so there is a pot of my money sitting there doing nothing unless I gain employment again with the NHS, but where I live, there’s a recruitment freeze. If I’d have had the choice I would’ve taken my money without hesitation.

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  • I know how to get our money. Strike!

    If we don't, then things will only get much worse. We only have ourselves to blame if we sit around wringing our hands and gnashing our teeth, whilst the government takes a step back to smile contentedly at the disarray it has caused within the NHS.

    Anybody heard about what's happening with the Bankers these days? The ones who caused the whole sorry mess that we are paying for with our livelihoods and our pensions? Hasn't it gone quiet, as they continue to pick up their still inflated wages and mega bonuses?

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  • Anonymous | 2-Aug-2011 4:19 pm

    you obviously know far more about it than I do and maybe from what you say the rules are already quite clear.

    from what I can see is that it is all one big mess and very uncertain and one needs to decide very carefully and foresee what can happen in various scenarios like yours. It can be extremely frustrating and costly if things go wrong, which sadly they seem to fairly often, not just in the NHS but right across the board!

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  • Sadly we will all have to work until we die as retirement is going to be for the rich only. Very sad.

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  • Anonymous | 2-Aug-2011 4:19 pm

    I have to agree with the nurse that took her pension. I took mine last year at 59 with 37 years service. I feel it has been a wise decision, although this g'ment's intentions were not apparant at the time. I did it for health reasons, mainly wear and tear. I feel such sorrow for the professionals caught up in all this. There has been one knock after another to NHS staff, it is scary that there could be more to come, so, so sad

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  • The duplicitous thing about these so-called extra pension contributions is that they won't be going towards any pension pot at all. The money will simply go into general government revenue and be used for the array of things that government spends money on these days.

    If the government was serious about asking people to pay more towards their pensions then they should earmark the pension contributions and use the extra money for only NHS pension related purposes...but they won't.

    It is simply an extra tax on public sector workers.

    The government, as usual, has not thought through the implications of this policy.

    Why should people pay more, and work longer, in order to receive less?

    I expect a lot of people will opt out of the NHS pension scheme because they cannot afford it. I know that many women opted out of the NHS pension scheme in the past and many, many more will opt out in the future.

    The implications of this for future government policy will be felt for a long time.

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  • Peter Morris | 3-Aug-2011 10:33 am

    don't you demand to see their balance sheet which should be totally transparent about where all the contributions are being invested or paid out? If this is not available for public scrutiny, as contributors you have a right to demand that this be made available for scrutiny.

    If too many opt out of the scheme does this not have a serious impact on investment and the level of future payouts?

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  • Further to my above comment I imagine the balance sheets of the NHS pension fund have to be made available by law as all others concerned with government spending.

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  • Seems the government as the major shareholder has a different view of bankers (Guardian - RBS bankers get £950m in bonuses despite £1.1bn loss) than nurses

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  • Natalie Jewell

    Potentially a big mistake if DH actually want to keep the NHS going. Yes, there are some nurses who do not keep working in the NHS for their pension but a large percentage do. There is the potential for a mass exodus of those who have only stayed for this reason.

    Morale has been low for a few years, I honestly don't know if it can sink much further.

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