SoR welcomes delay in increased pension contributions in England but urges Government to further rethink plans

Dean Rogers responds to the outcome of the Government's NHS pension scheme consultation for England and Wales.

Published: 24 February 2022 Government & NHS

The Government has published the outcome of their consultation about proposed changes to the NHS pension scheme for England and Wales. The Department for Health and Social Care (DHSC) has:

  • Delayed plans to introduced contribution increases until October 2022. Further changes due for April 2023 are scheduled to proceed as planned.
  • Delayed plans to aggregate pension contributions for those who have multiple employers (e.g. some members who work part time across different Trusts). The delay recognised the administrative difficulty of setting this up in a safe, effective and efficient manner.
  • Announced they will provide specific separate guidance on how best to determine contribution rates for new Bank staff.

The DHSC has confirmed they will be proceeding with plans that:

  • Determine contribution rates based upon actual pensionable pay – mainly impacting part-time staff whose current contributions are linked to their full-time equivalent salary. This will in principle make contributions fairer.
  • Introduce a new contribution structure in line with their original proposals, with indications that further reforms are planned in future to bring the percentage contribution rate closer together for all scheme members regardless of salary.
  • Increase the contribution thresholds each year in line with Agenda for Change (AfC) pay awards.

Our position

SoR Executive Director of Industrial Strategy & Member Relations Dean Rogers commented, “The SoR opposed the proposed changes, not because they were the wrong thing to do in principle but because the timing is wrong. It would be churlish not to welcome the delay in increased contributions for most members, which the DHSC explicitly link to the outcome of the Pay Review Process.

However, this puts added pressure into that process. The next pay award must now make up for two sets of pension contribution increases and national insurance increases if the concerns on recruitment, retention and pension scheme membership recognised by DHSC in their report isn’t to happen despite the delay.”

Rogers added, “The NHS scheme is an excellent benefit for all NHS members. It remains the case that no-one would find a better long term savings plan and the changes since 2014 have, especially for new joiners, strengthened it further. The principles behind these changes in theory make the scheme fairer, however the problem is timing.

The Government have taken the money that was available to rectify discrimination identified in the McCloud judgement. This is the equivalent of making a victim pay for their own compensation after an assault. The timing means most will have to pay more to make the scheme fairer and during a cost of living crisis that could undermine confidence in the pension scheme. This won’t seem fair to scheme members.”

Rogers further explained: “We are concerned the Government haven’t realised how these changes more explicitly link pensions to pay awards. This politicises pensions – which is generally not a good thing as politics tends to be short term and pensions require stability and a long-term perspective. The SoR and the other health unions will work hard to protect the integrity of the pension scheme and make sure these, and future changes work, are positive for SoR and pension scheme members.”

Learn more

To view the full report, please see here

The outcome of parallel consultations in Northern Ireland and Scotland are awaited.