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Nursing pensions: the story so far

As negotiations continue over proposed government changes to NHS and public sector pensions, we take a look over recent events and examine what effects these changes will have on nurses.

Higher pension contributions, pay freezes and the threat of a return to local pay bargaining; this is the increasing reality for nurses and a host of other public sector as they work their way into 2012 and beyond. 

As talks between the representative unions and the government stutter on, there is no getting away from the imminent prospect that nurses face paying hundreds of pounds a year more into their pensions coupled with the dual threat of less money when they retire and less money in their pay packet during their working life. 

This grim reality has already seen thousands of public sector workers taking to the streets to protest against what many nurses and other public sector workers see as a grossly unfair hit on their salaries and future retirement plans. 

The government plans have resulted in fury from the nursing unions. Royal College of Nursing chief executive and general secretary Peter Carter recently said that nurses and healthcare assistants were the "lifeblood of the NHS" and he warned that they were angry.

“Their pensions have already been reformed, and are far from generous. Targeting them now is unjust and unnecessary."

He warned that the average woman with an NHS pension takes home less than £4,000 a year, something he said was "not exactly gold plated." 

Despite deciding not to ballot for strike action whilst 29 other representative staff organisations did, the RCN did express their support for other colleagues who decided to strike on 30 November 2011. 

And as Nursing in Practice went to press, the Royal College of Nursing (RCN) announced that it would ballot its members on whether they wnated to accept or reject the government's pension proposals. Following the ballot the RCN's governing council will then hold a special meeting to discuss the result and any further action.

An RCN ballot for national strike action would be unprecedented but the government's current proposals will mean that staff will be forced to contribute up to 28 per cent more towards their pensions from April, rising again in 2013-14 and 2014-15. 

Under the plans the average nurse, earning £34,600, would pay 18 per cent more in 2012-13.  After tax relief is taken into account, a staff nurse earning £25,000 will have to pay an extra £120 a year, while a nurse consultant earning £60,000 will pay an additional £720. Above this, contributions rise further so that a board director on a £130,000 salary will pay an additional £1,824. 

Yet despite paying more, nurses also face the prospect of receiving a less generous pension in future. As it stands NHS staff pay between 5 and 8.5 per cent of their salaries towards their pensions, with higher earners paying a bigger proportion of earnings. In return, employers pay a further 14 per cent. But the government wants to save £2.3bn in 2013-14 and £2.8bn the year after from public sector pension schemes, and it wants each public sector - including the NHS - to raise staff contributions by 3.2 percentage points.

The government has also indicated it wants to replace final salary pensions - favouring those whose salaries shoot up as they near retirement - with a scheme based on members' average earnings across their whole career. 

In an attempt to soften the blow, a week after the November strike the government announced that an extra 530,000 lower paid staff have been spared from making extra pension contributions in 2012-13 by raising the threshold for freezing NHS pension scheme contributions from £15,000 to £26,557 for 2012-13. 

However, higher earners will still have to pay more. Those earning £26,558 to £48,982 will contribute 1.5 per cent more and those earning £48,983 and more will contribute 2.4 per cent next year. The DH said the number of staff spared the higher contributions would rise from 100,000 to 630,000. 

Throughout the debate health secretary Andrew Lansley has maintained that in his view "introducing sustainable arrangements, fair to staff and fair to the taxpayer, are essential if the NHS Pension Scheme is to retain its place at the heart of the reward package for NHS staff."  Mr Lansley insists that public service pensions will remain "among the very best available".

However, he has also warned that the government's proposed changes are not in themselves enough to ensure that NHS pensions are affordable in the long term.

“Public service pensions will [provide] a guaranteed pension level for all employees - today very few private sector employers still offer this.  But people are living longer and pensions are costing taxpayers more and more every year.”

Needless to say the unions are not impressed. Christina McAnea, UNISON Head of Health, told Nursing in Practice that 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.

“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.

“With pay frozen until 2013 and limited to 1 per cent a year until 2015, we estimate that the value of nurses, paramedics and other NHS workers' pay will have plummeted 16 per cent by the time the cap ends.”

She admits she is "beginning to question" whether the government is serious about reaching a deal.  "We are in the middle of tricky negotiations where the goalposts keep moving and where the timetable looks increasingly unrealistic.  We will not walk away from talks but we need assurances that the desire for a deal is not one-sided.”

According to Howard Catton, head of policy at the RCN, although nurses understand that the country needs to address the deficit and that they were not immune to what was happening economically, they did not think the government's proposals were fair.

"Nurses don't feel this is fair and that we are all in this together, they feel like the speed, precision, and the determination with which the government moved to address public sector issues against pensions and pay, and the direct impact cuts are having on the frontline and on patient care stands in stark relief to the timidity and nervousness of the government to address some very significant questions that have been raised in relation to the banking industry and the City."

Mr Catton warns that the government would be wrong to suggest that nurses were being protectionist or that they do not understand what is happening economically. 

"Nurses understand that the country is in a different place...we don't have people who are deficit deniers but people who think that the government's proposals are not fair."

Rachel Maskell, head of health at Unite, agrees. "When people did a calculation of the government's proposals they realised it was a massive hit on their terms and conditions, people are very angry, we've actually been shocked at the level of anger at the changes."

"What the government seems intent on doing is picking a fight with loyal civil servants who don't understand why it has to be them."