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Government makes 'improved' NHS pensions offer

08 December 11 15:23
Protesters march in London over pensions

The government has announced an "improved" offer on NHS pensions which it hopes will help end part of the wider public sector pensions dispute.

Under the proposals, 530,000 staff earning between £15,000 and £26,557 would be spared any rise in pension contributions next year.

But higher-earning employees would be expected to contribute more.

Doctors' union leaders say it will "intensify" the anger many in the profession already feel.

The move follows last week's public sector strikes which unions say saw up to two million workers walk out in protest at pension plans.

The government wants public sector workers to pay more towards their pension schemes, retire later and accept a pension based on a "career average" salary, rather than the current arrangement in which many public employees' pensions are based on their final salary.

'Protecting staff'

On average, workers face paying an extra 3.2% of their salaries in pension contributions.

Under the initial Treasury offer published in July last year all NHS workers earning under £15,000, equating to about 100,000 staff, were protected from raised pension contributions.

The revised proposals would see this ceiling raised to £26,557 - affecting an additional 530,000 staff - but only for one year.

This would be paid for by asking staff earning more than this to make higher contributions.

Those earning between £26,558 and £48,982 would be expected to contribute 8% of their monthly salary next year, up from 6.5% now.

This would rise to 8.9% for those on salaries between £48,983 and £69,931 and to 9.9% for those in a pay band of £69,932 to £110,273.

The BBC understands no new money is on the table and unions said the revised offer would penalise middle earners in the NHS such as nurses, health visitors and speech therapists.

'Cold comfort'

Health Secretary Andrew Lansley said the proposed changes would "protect low-paid" staff in the health service.

"Having listened to staff and stakeholders, we have improved our proposals so that an extra 630,000 NHS staff will not pay any more into their pensions next year."

But he warned that the proposals "alone will not be enough to ensure that NHS pensions are affordable in the long term" and further discussions were needed to secure a comprehensive agreement.

Dr Hamish Meldrum, Chairman of Council at the BMA poured scorn on his comments.

"It is inconceivable that the government can claim to have come up with this idea 'having listened to staff'," he said.

"Thousands of doctors and medical students, along with other NHS workers, responded to consultation urging the government against further contribution increases.

"The announcement of an even steeper hike will intensify the anger they are already feeling.

"Doctors contribute up to 8.5% of their pay for their pensions - among the highest in the public sector. That figure could be as high as 14.5% by 2014.

"There is no justification for this, particularly when the final salary pension is to be replaced with a career average scheme."

"The proposed increase in pension contributions will still hit more than half of all NHS staff who are already struggling to cope with the pay freeze and rising inflation," said Christina McAnea, from Unison, which represents more than 1.3 million public sector staff.

"The one year delay before making the lower paid contribute more is cold comfort. Having an increase looming large when the cost of everyday essentials like food and heating is rising so fast is a nightmare for cash-strapped families."

Unite's assistant general secretary Gail Cartmail accused government of trying to circumvent the negotiating process.

She added: "In its haste to sell this as good news, the government is failing to state what it plans for years two or three. They will press on as before so this is a swindle and a short-lived one at that."

Royal College of Nursing Chief Executive & General Secretary, Dr Peter Carter, called the offer "divisive and provocative move" which would mean that more than two thirds of nurses will now face further increased pensions contributions.

"The truth is these increased contributions will not go into the NHS pension scheme, but will go to the Treasury to help pay off deficits that nurses and healthcare assistants have had no part in creating.

"This is nothing more than a tax on nurses, who are already in the middle of a two year pay freeze and then effectively face two more years of pay cuts after that - at a time when inflation is soaring.

"Having to pay an average of an extra £30 a month on top of this is a deeply unwelcome surprise Christmas present from the Government."

The BBC's Industry Correspondent John Moylan said this was a significant new offer but only applied to the NHS - just one of the four major public sector schemes at issue - and did not alter the fundamental terms of the dispute between unions and the government.

MPs are debating the issue of public sector pensions on Thursday with the SNP and Plaid Cymru calling for the government to rethink its "unfair" proposals.

The two parties are using an opposition day debate they have secured in the Commons to argue that negotiations have not been transparent and claim that the government was primarily motivated by a desire to reduce the deficit rather than guarantee the long-term sustainability of pensions.

"This is just a cash grab from public sector workers who will work longer, pay more and get less in return," Plaid Cymru's pensions spokesman Hywel Williams said.

"It was not teachers and civil servants who left the finances in a mess - so why should ordinary people have to clear up the mess?"

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