NHS Employers has made proposals to increase the normal retirement age from 60 to 65, corresponding to plans by the government to make public sector staff stay working for longer.
Various sweeteners have also been suggested, presumably to make this change more palatable. For example unmarried partners who survive an NHS pensioner would receive improved benefits, and employers also promise to make the NHS pension more adaptable to the needs of individuals.
Under the present scheme, most NHS pensions are based on an employee's average salary in the last three years before retirement. An NHS employee receives an eightieth of this amount for each year they have been employed by the NHS; for example, someone who had worked for the NHS for 40 years would get a pension equivalent to half the average salary for their final three years of employment.
Under the new proposals it is claimed that pensions would build up faster. Staff would get a sixtieth of their salary for each year served. However the calculations would be based on the average salary throughout the employee's career, adjusted for inflation. The new pension would normally be paid at 65,and no longer at 60.
Advantages
• the NHS openly acknowledges that saving money is an important
consideration of the proposals. The NHS pensions bill is set to rise due to the increasing life expectancy of pension scheme members, cutting into resources that could otherwise be used on patient care
• raising the retirement age is in line with government plans for everybody who works in the public sector
• Employers insist that existing staff will be offered the opportunity to transfer to the new scheme and be eligible for all of the benefits of the new scheme; or they can stay in the present scheme and qualify for a more limited package of benefits
• under the new scheme staff will be able to take part or all of their pension between the ages of 55 and 65, while retaining the possibility of continuing to work
• the lump sum which NHS staff will be permitted to take in lieu of their pension will be increased to 25% of it
• staff will be allowed to "step down" to a lower paid job while having their pension rights protected
• NHS employees will be given the choice to retire taking full pension benefits, and then rejoining the scheme after a break
• employers claim the proposed pension changes are a result of pressure by both staff and employers
Disadvantages
• the government is forcing NHS employees to work longer for less pension
• forcing staff to work longer will simply increase the number of retirements on the grounds of ill-health and end up costing the NHS more
• the lives of patients could be at risk if staff felt obliged to carry on working in vital occupations in order to avoid loss of pension benefits
• employers have not taken into consideration the emotional and physical demands of nursing which could prevent many nurses from working to an increased retirement age
• the proposed changes may not even save money. Under the current scheme, a pension for each new member of staff is calculated to be worth about 18% of their salary. This figure falls to 16.9% cent if the retirement age is to be raised to 65. However once the cost of improving benefits is added back in the pension will still cost 18% cent of salary!
• many NHS workers (as well as many public sector workers) say the only thing which makes poor salary and conditions bearable for them is the promise of an excellent pension at the end of their working life; without such a pension many public sector workers may become disillusioned and disaffected
• the erosion of the hitherto attractive NHS pension is likely to have an adverse effect upon morale and will ultimately negatively affect the way the service is delivered to the public
• the Government talks about negotiation and consultation but has made it evident that raising the retirement age is in fact non-negotiable
• in reality the benefits of an NHS pension scheme are actually worth 30% of final salary rather than the 20% quoted by NHS. This is because the pension is secured by the government and is deliberately undervalued by NHS employers;
• the way in which the new pension is calculated favours those who see little progression in their career. This is against the spirit of Agenda for Change has been sold to NHS employees on the basis of the promise of an emphasis on career progression
SOURCES:
Society Guardian
Money.Telegraph
Society Guardian
NHS Employers
NHS Pensions
