Opinion

Rights at work: pension review at critical point

07 December 2018

Colenzo Jarrett-Thorpe, Unite national officer for health, looks through the impending NHS pension review and what trade unions are asking for.

Rights to Work iStock

Trade unions, employers and the government are now reviewing NHS pension scheme members’ contribution rates for implementation in April 2019. Since the introduction of the new CARE (career average revalued earnings) pension scheme in 2015, there has been disquiet among some members about their contributions, which are tiered and increase in line with their earnings (see contribution rates, right).

 

Moving tiers

Though the public sector pay cap of 1% was broken only this year, it has not prevented some members moving into the next contribution tier, either through moving up an incremental point, promotion or an annual increase in salary. On some occasions, this has resulted in members’ actual take-home pay not increasing, but staying static or even decreasing, when income tax thresholds or in-work benefits are taken into account.

Both trade unions and NHS employers put forward a number of jointly agreed objectives to the Department of Health and Social Care (DHSC) in July, which preceded the evaluation of the NHS pension scheme in the autumn by the Government Actuary’s Department (GAD). Currently, the scheme is in surplus by 3.2%. Trade unions and employer preferences for utilising this are:

  • Retrospectively equalising survivor benefits for pre-1988 service for active members only
  • Combining the top three contribution tiers to pay 12.5%
  • Retaining current contribution structure but tier-applying based on actual pay rather than whole-time equivalents
  • Indexing contribution tiers.

GAD must agree to this for the review to be complete, and it must then be approved by the DHSC, the Treasury and Parliament to be in place by April 2019. A default position for utilising the surplus if agreement is not found would be to reduce the accrual rate for the NHS scheme from the current 1/54. Certainly, more work needs to be done to ensure that the benefits of the surplus are shared equitably.

Table 1

 

Back-door cuts 

These discussions come in the midst of the government committing to pay the extra money required to cover the cost of the NHS pension funding beyond 2019-20, which could mean back-door cuts to services to meet pension provision.

We believe that the government has committed to fund any further cost pressure arising from actuarial revaluations within the five-year period of the settlement, should it be higher than £1.25bn (UK Parliament, 2018). 
At the time of writing, other public sector pension schemes had not received similar funding commitments.

Unite-CPHVA remains involved in these discussions on the NHS pension scheme. We will provide more information as we approach April 2019, when the results of the review should be implemented.


 

Reference

UK Parliament. (2018) NHS: pensions: written question: 179294. See: https://www.parliament.uk/business/publications/written-questions-answers-statements/written-question/Commons/2018-10-15/179294 (accessed 20 November 2018).

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