Government makes pensions offer to avoid industrial action

The government has announced a conditional offer for public sector pension schemes, to increase the cost ceiling and give more flexibility to those approaching retirement.

Mr Alexander: anyone within 10 years of their pension age on 1 April 2012 will be protected
Mr Alexander: anyone within 10 years of their pension age on 1 April 2012 will be protected

The government said it would increase the cost ceiling for public sector pensions by 8% and give more security to those within 10 years of retirement.

Giving a statement in the Commons on Wednesday, chief secretary to the Treasury Danny Alexander said: ‘I have decided to revise the government's offer.

'It increases the cost ceiling and provides generous transitional arrangements for those close to retirement.’

Mr Alexander said the offer was conditional upon reaching an agreement. If an agreement cannot be reached with unions then the offer will no longer stand, he said.

The offer includes a more generous ‘accrual rate’ – the rate at which annual benefits are earned – increasing from the 1/65ths offered in October to 1/60ths. This is an 8% increase.

Mr Alexander also announced that anyone within 10 years of their pension age on 1 April 2012 will be protected, meaning they will see no change in when they can retire nor any decrease in the pension they receive at their normal pension age.

Chairman of the BMA Dr Hamish Meldrum called the announcement ‘a step in the right direction’.

Dr Meldrum said it was positive that the government had ‘belatedly’ responded to the strength of feeling against the proposed pension reforms.

‘However, the fact remains that under these plans, NHS staff will work longer and pay more, despite the fact that their pension scheme was overhauled only three years ago, and is already sustainable in the long term.

‘The government’s claim that many staff will get a better deal is questionable when you take into account that they will have to work for up to eight additional years, and pay a huge amount more in contributions,’ Dr Meldrum said.  

The BMA will now ‘carefully consider’ the detail of the proposals with other health unions and seek feedback from mem-bers, Dr Meldrum said.

Dean Royles, director of NHS Employers, said: 'This revised offer provides the basis for further detailed discussions with a chance to reach agreement and avoid industrial action.

'Employers and unions know that strike action will affect patient care and in light of this statement, such action would be premature.'

How the changes to the 'accrual rate' would work

 A nurse with a salary at retirement of £34,200 would receive £22,800 of pension each year if these reforms were introduced – under the current NHS Pension Scheme 1995 arrangements, they would get £17,300.

 

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