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Pensions: your money, your future

The government is proposing some fundamental changes to the NHS pension scheme. As consultation over the changes kicks off, the CSP urges members to ensure their views on the proposals are heard.

Consultation over a national review of the NHS pension scheme begins this month.

As reported previously in Frontline, the government is proposing some fundamental changes that will impact on members' future income.

It is therefore essential that members respond to the consultation exercise to reinforce the arguments put forward on their behalf, says the CSP.

The Society has worked hard during national discussions to represent members' interests, focusing on priorities identified by the organisation's industrial relations committee.

'While some progress has been made, there are still some major issues to resolve,' said Lesley Mercer, acting director of CSP employment relations and union services. 'We want to go back into national discussions after the consultation exercise using members' views as a steer.'

Members in England and Wales will receive a detailed letter about the review in their January pay packets. The consultation exercise here runs from January 10 until April 11. Slightly different arrangements apply in Scotland and Northern Ireland (see below).

In addition, the Society has produced a briefing on the review that needs to be read in conjunction with the letter. Stewards will be sent a copy of the briefing with the January edition of Steward's News but other members can access it through the CSP website (details at end of article).

Taking part in the consultation exercise

The Society is urging members to respond individually to the NHS Confederation, which is running the review for the Department of Health in England and Wales. Members should use the designated response form, which can be found at the end of section 12 of the main consultation document (details at end of article).

Members should also take part in local CSP meetings, which stewards are being encouraged to organise during February and early March, the Society says. 

The meetings are intended to give members an opportunity to collectively discuss issues. Stewards will report back to the Society on the discussions, with the feedback being used to support the CSP's position in future national discussions. 

Members should contact their steward to find out if a meeting will take place in their area.

The main issues

The Society's briefing paper identifies the key issues arising from the review for physiotherapy staff. Among the most contentious of these are proposed changes to the normal pension age (NPA) and the possible replacement of the final salary scheme.

Normal pension age

The government wants to increase the NPA to 65 for all public sector workers. Under the proposed change, people who retired before that age would have their pension 'actuarially reduced' to reflect the earlier payment date. 

The Society, along with every other health union, opposes the move, saying the nature of physiotherapy work makes it 'very difficult' for many members to extend their working lives through to 65. 

The briefing paper states: 'The inevitable consequence of raising NPA is that some members will simply end up retiring on a lower pension.' 

The government has signalled that existing public sector workers would not be affected by the new NPA until 2013, and that all pension rights built up until then would be fully protected. The Society does not believe protection for exiting members until 2013 is sufficient and has argued during the national discussions for better arrangements.

The NHS Confederation has been sympathetic to this argument and the consultation paper invites views on extending protection to 2016 to 2018, as well as to giving indefinite protection to those with special class and mental health officer status.

Depending on the feedback received during the consultation, this proposal will go to ministers for approval.

If new pension arrangements based on an NPA of 65 were brought in, they would apply to new entrants from 2006 as part of a brand new pension scheme. Existing members would have the option of transferring to this new scheme.

The new scheme would 'contain a number of improvements, funded out of the savings created by increasing NPA to 65'. The main improvements proposed for the new scheme include the building up of pension at a faster rate, the introduction of equal survivor benefits and more flexible working for those nearing retirement.  

Although it opposes raising the NPA, the Society says it is willing to discuss with NHS employers possible ways of assisting members who wish to work longer 'on a voluntary basis'. 

The CSP briefing urges members to write to the NHS Confederation supporting the Society's stance. 

Replacement of final salary scheme

The consultation paper invites views on whether the new scheme should base an employee's final pension on their career average earnings (CARE), rather than final salary. 

The main consultation document contains some detailed information about how both schemes operate. In addition, the NHS Pensions Agency is working on a 'modeller' to help individual scheme members compare the benefits they would receive under each approach. Once developed, the modeller will be accessible through a link on the NHS Confederation website. 

The Society says it cannot accurately assess how individual members will fare under CARE if it is introduced because their circumstances will vary according to their career pattern. 

In general, it adds, CARE schemes benefit staff with 'flatter career structures', such as those who remain on the same grade for their whole working lives. 

A qualified physiotherapist who reaches band seven or above or an assistant who reaches band four or above is likely to be worse off under the CARE scheme unless they reach their final grades early in their careers, according to the Society.

It points out to members that any gains under the scheme will come at the expense of 'reducing pension rights for those with better career patterns'. 

The Society's briefing paper states that final salary arrangements are well understood by members and provide predicable benefits, which are easily calculated. It expresses 'serious reservations' about replacing this system with a CARE scheme, whose 'potential benefits are extremely difficult to quantify'.   

The Society is particularly keen to get members' feedback on this issue. It recommends when members respond to this section of the consultation paper that they consider the arguments for and against CARE 'using their own projected career pattern as a base'. 

Scotland and Northern Ireland 

Scotland will be consulting over the same broad proposals, though consultation is expected to start slightly later, around January 24, and will run for three months. 

The consultation documents, once finalised, will be placed on the following website:  In addition, it is planned to send a letter outlining the main changes to all scheme members with their January pay packets.

Northern Ireland will consult on identical proposals as England and Wales, probably between January 24 and April 30. Consultation materials will be placed on the following website: 

Separate CSP briefings are being prepared for members in Scotland and Northern Ireland and can be accessed through the Society's website.

The main pension review consultation document for England and Wales and a summary can be downloaded from the NHS Confederation's website:

Members can email questions about the proposed changes not answered by the consultation documents to the NHS Confederation at:

For a copy of the CSP members' briefing on the review, go to the new pensions page in the workplace issues section of the CSP website:


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