NHS Pension Scheme Review - Agreement between NHS Employers and the NHS trade unions

NHS Pension Scheme review - final agreement This is the final agreement between NHS Employers and the NHS trade unions on changes the NHS Pension Scheme, announced on 21 September 2007. (71 kB PDF)

Extract & Introduction
1. This paper sets out the final terms of the agreement reached between NHS Employers and NHS staff side at the Pensions Review Steering Group. Within the overall NHS pension arrangements, the agreement sets out a two scheme structure for active members of the NHS Pension Scheme with new entrants joining the New NHS Pension Scheme and existing members staying in a revised version of the current Pension Scheme, the NHS Pension Scheme (1 April 2008 and after terms) and being given a choice as to whether to remain in this for both past and future service or to transfer to the New NHS Pension Scheme for both past and future service benefits (including any added years they are buying).

2. A separate review is taking place covering ill health retirement. There are a number of clear overlaps between the two reviews. Ill health pensions are an important part of Scheme design and will need to feature in both new and existing Schemes. The cost of the arrangements set out here includes the release of 0.05% of pensionable pay through changes to the ill health retirement arrangements. This will enable more members to pay the 5% contribution compared with the proposals consulted on in 2006. The Ill Health Retirement arrangements when finally agreed will form part of the overall pension agreement and will be covered by the governance arrangements (paragraphs 65-67).

3. The design of the changes to pension arrangements has taken into account equality issues. As part of the governance arrangements, the impact of these changes on equality issues will be kept under review including benchmarking. 4. This agreement is based on analytical work carried out by the Government Actuary’s Department (GAD), independently peer reviewed by the actuarial adviser engaged by the review, Hilary Salt, from First Actuarial. Fuller details of all the agreed changes are set out in separate papers listed in annex B. These and other associated review
documents are available at www.nhsemployers.org/pensionagreement.

• NHS Employers Link - http://tinyurl.com/33yqwx
• NHS Pension Scheme - employer summary This is a summary for employers of all the agreed changes to the NHS Pension Scheme, announced on 21 September 2007. (146 kB PDF)

----------
21 Sept...
Health Minister Ben Bradshaw today accepted the final agreement for changes to the NHS Pension Scheme and implementation from April 2008.

The NHS Pension Scheme Review, led by a partnership between NHS Employers and NHS trade unions, was tasked with developing a sustainable pension scheme fit for the NHS in the 21st Century.

Existing staff, and those joining the NHS Pension Scheme up to 31 March 2008, will keep their normal pension age of 60. Major changes include the introduction of a new scheme for new staff with a normal pension age of 65. The minimum age for drawing a reduced pension will also increase from 50 to 55 for new entrants.

Other changes include:

• Earnings related, tiered contributions so that higher paid staff pay more fairly for the benefits they draw
• Cost sharing arrangements between employers and staff to limit the cost of the Pension Scheme and to contain long-term costs to the NHS
• Survivor benefits for all nominated partners - not just spouses and civil partners. These benefits will now be payable for life
• A new purchase facility for members who wish to increase their benefits
• New step-down arrangements so that final salary staff approaching retirement can transfer to less demanding duties without loss of pension entitlement
• More flexibility for members who wish to convert part of their pension into a lump sum on retirement

Health Minister Ben Bradshaw said:

• "NHS Employers and NHS Trade Unions have done an excellent job of listening to both staff and employers. The new NHS Pensions Scheme strikes the right balance between the security that staff deserve in their retirement and affordability for the taxpayer.
• "The existing scheme has provided well for staff, but has changed little over the past 60 years. It is right that we recognise the vast shift in working patterns since the 1940s, the reform of the tax regime for pensions in recent years, and changes to employment legislation.
• "The new arrangements will give staff more control over how they save for their retirement, as well as how and when they retire, whilst managing costs."

Back to news index