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'The NHS pensions calculator paints a bleak picture'

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On Friday, just as the news team was busy putting Nursing Times to bed, the DH posted a “pensions calculator” on its website to provide an “illustrative estimate” of how the proposed changes to the NHS pension scheme will affect members.

A cynic might assume it was part of the propaganda scheme being rolled out by the government to win hearts and minds (or at least minds) ahead of Wednesday’s planned strike.

This has seen Andrew Lansley asking NHS chairs to communicate the “facts” about the proposed changes, which were set out in a handy list for staff to consult. The Treasury has also used YouTube to answer questions posed by staff regarding the renewed offer announced earlier this month. The questions, which included “what are the benefits to the new scheme?”, would’ve embarrassed a roomful of sychophantic showbiz reporters, let alone a mass of furious public sector workers.

But the pensions calculator doesn’t put a convenient sheen on the changes. It actually appears to paint a fairly bleak picture.

Take, for example, a 47-year-old nurse (the biggest proportion of nurses are between 45 and 49 according to Information Centre statistics). This nurse is on Agenda for Change band 6, earning £31,454 a year (average nurse wage is £31,700 according to the IC), and joined the scheme as soon as they started working in the NHS, aged 21.

Under the new scheme, their annual pension would be £20,396 at retirement. This compares with the £16,666 a year they’d get under the current scheme. In both cases, they’d benefit from a £49,998 tax-free lump sum.

But of course, the new scheme would force workers to work until the age of 66.

So a fairer comparison, looking at what they’d be able to withdraw under both scenarios aged 60, shows they would actually be more than £1,025 a year worse off under the changes.

Similarly a 47-year-old senior manager on band 9 would take £47,518 a year under the current scheme, £58,154 under the new arrangements, enjoying a £142,554 lump sum regardless of the changes.

But retiring aged 60 if the plans go ahead would deprive the senior manager of nearly £3,000 a year.

Another observation is that even the lowest paid middle-aged worker would be worse off under the new pension scheme by their 60th birthday.

Yet the government was quoted in a national newspaper yesterday as saying “many low and middle income earners will in fact receive a larger pension at retirement”. That may be true for younger, low paid workers, more likely to feel the benefits of the switch to a career average scheme.

But all is not lost for my theoretical 47-year-old. The DH explains in its introduction to the calculator that: “Members within 14 years of Normal Pension Age on 1 April 2012 may receive some form of protection.”

As plans stand, the protection only extends to those within 10 years of retirement, but unions – many of which let’s remember have ageing memberships – are keen to negotiate a “tapering” of this benefit, rather than seeing a sudden “drop off” point. If the government gives any ground, this is likely to be its next offering.

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