Health Secretary: “Proposals will protect the lowest
paid”
The Department of Health
today launched a consultation on proposed changes to the level of
contributions made by NHS Pension Scheme members towards their pension.
It follows plans set out in the Spending Review 2010 to secure
£2.8bn savings per year by 2014/15 through increasing public
service employee pension contributions by an average of 3.2%,
phased in from April 2012.
The consultation document published today sets out proposals for
increased employee contributions to the NHS Pension Scheme in
2012/13 only. This represents around 40% of the total contribution
increases expected by 2014/15. Proposals for increasing rates in
2013/14 and 2014/15 and the wider Hutton agenda will be subject of
further discussion with trade unions.
Under the proposals, the lowest earners would be protected. Those
earning less than £15,000 on a Full Time Equivalent basis will pay
nothing extra. Almost all newly qualified healthcare professionals
would only pay 0.6% more towards their pensions in 2012/13.
Contributions increases would be greater for the highest earners.
The proposed increases in 2012/13 are approximately the same
amount that had already been agreed by the Unions under the ‘cap
and share’ arrangements set out in the pre-budget report 2009.
Health Secretary Andrew Lansley said:
“What will not change is that the NHS pension will remain one of
the very best available, providing a guaranteed pension level for
all employees – something that very few private sector employers
still offer. We will also completely protect the pensions people
have already earned. None of the rights people have accrued will
be affected.
"However, Lord Hutton made it absolutely clear that
there needs to be a fairer balance between what employees and
taxpayers contribute to public sector pensions. With people living
longer and healthier lives, the status quo is untenable and
unfair. It is entirely reasonable that people pay more to receive
the benefit for longer.
“The proposals we are setting out today will protect the lowest
paid in the NHS. Those earning less than £15,000 will pay nothing
extra towards their pensions and a nurse earning £25,000 a year
would pay £10 more a month in 2012/13. The top earners in the NHS
would be expected to contribute much more. A consultant earning
£130,000, for example, would contribute £152 more a month.”
Examples of how the proposed changes could affect individual
members include:
As a healthcare assistant working full-time
earning £15,000 a year ,
You would pay no extra for your pension. In 2012-13 you will
continue to contribute 5% compared to the current employer
contribution of 14%. This means that for every £1 you contribute,
the employer contributes £2.80. For your overall yearly
contribution of £750, your employer pays £2,100. Moreover, because
your contributions are tax free your effective contribution rate
is 4% which is equivalent to £600 per annumIf you are in the 1995
section of the pension scheme then for this, after you retire, you
will receive a pension, for this you will earn pension of £188 per
year and a tax free lump sum of £563 payable at age 60If you are
in the 2008 section of the pension scheme then for this, after you
retire, you will receive a pension of £251 per year, with the
option to exchange some of this for a tax free lump sum, payable
at age 65.
As a nurse working full-time earning £25,000 ,
In 2012-13 you will contribute 7.1%, compared to the current
employer contribution of 14%. This means that for every £1 you
contribute, the employer contributes £1.97. For your overall
yearly contribution of £1,775, your employer will pay £3,500.But
because contributions are tax free your effective contribution
rate will be 5.7%, equivalent to £1,425 per annum. This represents
an increased personal contribution in 2012/13 of £10 per month
after tax relief.If you are in the 1995 section of the pension
scheme then for this, after you retire, you will receive a
pension, for this you will earn pension of £313 per year and a tax
free lump sum of £938 payable at age 60If you are in the 2008
section of the pension scheme then for this, after you retire, you
will receive a pension, for this you will earn pension of £417 per
year, with the option to exchange some of this for a tax free lump
sum, payable at age 65.
As a scientist working full-time earning £30,000
,
In 2012-13 you will contribute 7.7%, compared to the current
employer contribution of 14%.This means that for every £1 you
contribute, the employer contributes £1.82. For your overall
yearly contribution of £2,310, your employer will pay £4,200.But
because your contributions are tax free your effective
contribution rate will be 6.2%, equivalent to £1,860 per annum.
This represents an increased contribution in 2012/13 of £25 per
month after tax relief.If you are in the 1995 section of the
pension scheme then for this, after you retire, you will receive a
pension, for this you will earn pension of £375 per year and a tax
free lump sum of £1,125 payable at age 60If you are in the 2008
section of the pension scheme then for this, after you retire, you
will receive a pension, for this you will earn pension of £500 per
year, with the option to exchange some of this for a tax free lump
sum, payable at age 65.
As a manager working full-time earning £60,000
,
In 2012-13 you will contribute 8.5%, compared to the current
employer contribution of 14%This means that for every £1 you
contribute, the employer contributes £1.65. For your overall
yearly contribution of £5,100, your employer will pay £8,400.But
because contributions are tax free your effective contribution
rate will be 5.1%, equivalent to £3,060 per annum. This represents
an increased personal contribution in 2012/13 of £60 per month
after tax relief.If you are in the 1995 section of the pension
scheme then for this, after you retire, you will receive a
pension, for this you will earn pension of £750 per year and a tax
free lump sum of £2,250 payable at age 60If you are in the 2008
section of the pension scheme then for this, after you retire, you
will receive a pension for this you will earn pension of £1,000
per year, with the option to exchange some of this for a tax free
lump sum, payable at age 65.
As a consultant earning £130,000 ,
In 2012-13 you will contribute 10.9%, compared to the current
employer contribution of 14%This means that for every £1 you
contribute, the employer contributes £1.28. For your overall
yearly contribution of £14,170, your employer will pay £18,200.But
because contributions are tax free, your effective contribution
rate will be 6.5%, equivalent to £8,450 per annum. This represents
an increased personal contribution in 2012/13 of £152 per month
after tax relief.If you are in the 1995 section of the pension
scheme then for this, after you retire, you will receive a pension
for this you will earn pension of £1,625 per year and a tax free
lump sum of £4,875 payable at age 60If you are in the 2008 section
of the pension scheme then for this, after you retire, you will
receive a pension, for this you will earn pension of £2,167 per
year, with the option to exchange some of this for a tax free lump
sum, payable at age 65.
Notes to Editors
The consultation document can be found on the Department of
Health website:
http://www.dh.gov.uk/en/Consultations/Liveconsultations/DH_128710
The consultation is open until 21October 2011. The proposed
changes only affect employee contribution rates in 2012/13. Tables
setting out the proposed contribution rates can be found in the
attached document.The proposals set out today will deliver around
£530m of savings from the NHS Pension Scheme in 2012/13For media
enquiries, please call the Department of Health newsdesk on 020
7210 5221.
Contacts:
Department of Health
Phone: 020 7210 5221
NDS.DH@coi.gsi.gov.uk