New NHS pension scheme may fail, warns the BMA

The BMA have warned that plans for a new NHS pension scheme are at high risk of failing to deliver and state that implementation in 2007 will be ‘extremely challenging'.

Andrew Dearden
Andrew Dearden

This warning appears in the BMA’s formal response to the NHS Pension Scheme Review.

The BMA supports the main elements of proposals to reform the NHS pension in England and Wales, such as current staff being able to continue to draw final salary pensions at the age of 60.

However, the BMA is critical of proposals to cap employers’ contribution rates and notes that several benefits of the new scheme would not be available to current staff unless they give up their protected pension age.

Under the proposals, normal retirement age for future NHS staff will rise to 65. The BMA questions the effectiveness of this change, arguing that incentivising staff to work to 65 would be more productive than punishing them if they do not.

Formal reponse from the BMA

The response also calls for:

  • NHS staff who have been prevented from pensioning their full income by tax restrictions to be able to pay past contributions into their pensions.
  • Future changes to contribution rates to be based on evidence rather than assumption.
  • The proposed pension purchase arrangement run alongside – rather than replace – an amended version of the existing added years scheme.
  • Survivor benefits for female staff who die to be based on all of their service – currently only service since 1988 is considered.

Dr Andrew Dearden, chairman of the BMA’s Pensions Committee, says: ‘These proposals are an improvement on the government’s previous position. Useful flexibilities and improvements to partner pensions are to be introduced, and these have been welcomed by our members.

‘However, the government should be investing in public sector pensions, and capping employer contributions would not be helpful. We are also extremely concerned that the proposed timetable envisages the new scheme starting in 2007. This is not enough time to revise the proposals, finalise them, and prepare the scheme.

‘The lack of detailed information could make it very hard for staff to make a decision about whether to move to the new scheme. The risk of the whole process failing to deliver is very high.'

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