NHS Pension Scheme Review in Scotland: Moving to
The UNISON Scotland Submission to the NHS Pension
Scheme Review in Scotland: Moving to the Future
This paper constitutes UNISON Scotland's response
to the NHS Pension Scheme Review in Scotland: Moving to the Future.
UNISON is Scotland's largest trade union representing
around 160,000 members working in the public sector in Scotland,
including over 50,000 employees in NHS Scotland
UNISON Scotland therefore welcome's the opportunity
to further participate in the consultation process by representing
views of its membership arising as a consequence of the publication
of "Moving to the future: the NHS Pension Scheme Review".
The joint proposals from the NHS Employers, Unison and other trade
unions, now require further detailed consideration in light of the
responses received. Of the specific written and verbal responses
received, these concentrated in areas of:
- Contribution rates
- Accrual rates
- Normal Retirement Ages
- Dependants Pensions
- Future Governance
UNISON Scotland Response
Employee's contribution rate
It has previously been reported that contribution
rates for members of the NHS Pension scheme are on average, higher
than contribution rates in other comparable schemes. However,
UNISON's members have expressed some surprise that whilst costings
of pension provision has received greater attention, the NHS Pension
Scheme, based on a "notional" fund is not exposed to the
same pressures as private sector schemes and therefore were yet
to be convinced that the government's estimate of future liabilities
over a 50-year cost projection calculated by the Government Actuary's
Department (GAD), is a methodology comparable with other pension
schemes and it will remain to be seen if this is a practical viable
UNISON accepts that assessing the right level of contributions
from both employees and employers to meet expected costs requires
a balance to be struck between competing demands. The NHS
has a high proportion of low paid workers and we are therefore pleased
to recommend a lower contribution rate for those currently in receipt
of basic pay of less than £15,001. These lower paid employees
have limited scope for pay progression and after an average of 20yrs
in the NHS will secure pension benefits of less than £3,750 per
annum, a larger percentage of these employees will be women working
part-time and therefore their benefits could be less.
It is on this basis that there has been a mixed reaction to the
proposed pension contribution rise. For specific groups, the
overall rise in contribution rates represents a 1.5% increase but
there is no reciprocal rate rise for employers. Our membership
has stated that payment of increased contributions is accepted on
the condition that any additional revenue generated by this increase
is used solely for the purposes of securing benefits for the future
and their contributions should not be channelled into protecting
NHS Employer's exposure to pension scheme expenditure. Contributors
to the NHS Pension Scheme expect to receive pension benefits when
they reach Normal Pension Age at least commensurate to that which
has been proposed in the consultation document.
Employer's contribution rate
It has not gone unnoticed by our members that the
NHS Employer's contribution rate to the NHS Pension Scheme will
not change substantially from that which it is set at now.
Whilst many private sector employers have historically paid contributions
averaging 15%, NHS employers have only relatively recently increased
their rate from 7-14%. A cap of any nature, let alone one
set at such a low rate in comparison to today's rate, of 14.2%,
is therefore incongruent with a Defined Benefit principle and UNISON
implores the government to reconsider this proposal in the near
Normal Pension Age
The confirmation that existing members of the NHS
Pension Scheme will continue to retire at the promised Normal Pension
Age of 60 (55 for those with MHO and special class status) was welcomed.
Some commentators further felt that this should be extended and
cited strong reasons why certain occupational health groups, such
as those within the Ambulance sector, having been recognised by
the government as being at greater risk of injury, ill-health and
lower than average life expectancy, felt that Normal Pension Age
for these groups should decrease.
The impact of the proposed reforms in Normal Pension
Age must be balanced against the common retirement age of choice
which is currently somewhere between 62-63. The fact that
currently, on a voluntary basis, NHS employees choose to work beyond
age 60 suggests that to raise the retirement age in a compulsory
way may have adverse effects to that envisaged, and may increase
the overall scheme costs. Not all occupational groups, especially
those in the NHS will experience similar rates of increased life
expectancy compared to the general populous.
Flexible working patterns
One of the key attractions of the new scheme commented
upon by our membership was around the flexibility to take all or
part of your pension whilst continuing to work in the same job.
Furthermore, the ability to contribute and further build an NHS
pension was largely welcomed. However, it is felt that there
needs to be clear communication of the penalties that would be applied
when withdrawing pension prior to Normal Pension Age. On the
whole, UNISON member's felt increased flexibility would incentives
those that could continue to work.
The flexibility offered by a 1/60th final
salary scheme, for all new entrants was very much welcomed.
Some concerns were expressed in relation to the commutation factor,
which represents poor value at 1:12. If life expectancy experience
is borne out in the NHS, a revision of this factor will be necessary.
Additionally, UNISON would suggest that the disadvantages to members
of taking larger lump sums than that currently available would need
to be clearly explained.
UNISON has many long serving members within the NHS,
some commencing employment and joining the pension scheme before
they reach the age of 20. Currently, those who have continued
to work and pay pension contributions until their 60th
birthday, are only permitted to count 40 years toward their pension,
even though they could have paid contributions in excess of 40 years
- these contributors feel rightly aggrieved by the current restriction.
It is the expectation of these groups that the method by which this
restriction is lifted fully recognises past contributions as the
fairest way in which this anomaly is rectified.
A number of comments were made with regard to the
introduction of Partner pensions. Some felt that the proposal
to provide a pension to non-married partners backdating cover to
1988, although welcome, did not go far enough and would like to
see the same formula applied to non-married couples as being currently
applied to married couples. With regard to the definition
of "Partner", UNISON's view is that it should be as wide
as possible to reflect modern families.
It was clear from our consultative process that there
needs to be greater communication of the pension scheme provisions
and benefits to all NHS pension scheme members and potential members.
Lack of communication was cited one of the most common complaint.
NHS employees, working unsocial hours or in isolated locations felt
that currently, access to information was poor and there was no
adequate means to receive details of their rights and entitlement.
UNISON would like there to be greater access to information, along
with interactive web-based resources should be an important feature
in ensuring that there is an increased level of awareness and understanding
in the future.
Comments were also received in connection with the
Choice exercise. Concerns were expressed as to the level and
accuracy of the information that would be provided. It is
imperative that information is provided on an individual basis,
of the highest accuracy and at a time that was consistent with wider
scheme changes. UNISON believes that additional resources
will be needed to channelled into this exercise to ensure that each
member be provided with a reliable statement of entitlement and
comparison at least six months prior to a decision having to be
Other concerns were expressed in relation to the lack
of information on the financial security of the pension scheme.
Many members had only the information presented to them in the National
Press and other media, which is of varying degrees of accuracy and
led to misunderstanding concern over the security of their pension
UNISON strongly supports the opening of the scheme
to a Governance regime. It is hoped that this will result
in greater accountability to the wider membership; seek to make
the scheme fairer and improve the management of the scheme.
It is vital that in order to facilitate the changing
employment patterns within the NHS, such as social enterprises and
delivery of services by those not directly employed by the NHS,
consideration needs to be urgently focused on ensuring there is
a seamless opportunity to continue to build up NHS Pension Scheme
benefits. It is true to say that staff continuing to work
in the NHS, albeit indirectly, receive legislative protection on
pay and service conditions but this does not extend to pensions.
UNISON members are often left without even a basic comparable scheme
and require greater reassurance and a more open and transparent
regime to protect their pension provision in the future. UNSION
would welcome discussion and agreement on this aspect, which the
consultation proposals is silent upon.
The Public Sector Transfer Club
The original purpose of this facility is to provide
greater ease and efficiency for public sector employees moving from
one public sector scheme to another. Presently, there are
a number of private sector schemes who also participate in this
facility. At a time when practices within the NHS has resulted
in closer relationships between public sector services, and other
organisations, we suggest that the Public Sector Transfer Club has
a stronger role to play in increasing the portability of pension
scheme transfers and provides a fair method for individuals to transfer
between public sector schemes and organisations signed up to the
UNISON Scotland generally welcomes the proposals within
this review, especially the decision to provide lifetime protection
of retirement age for existing NHS pension scheme members and the
decision to retain a final salary pension for all existing and new
We also welcome the recognition that saving for retirement
can be extremely difficult for the low paid and the proposed cut
in their pension contributions goes some way to tackling this problem.
UNISON Scotland also supports the extension of partner's
pensions to include not only married and civil partnerships but
also partners who are not married or within a civil partnership.
UNISON Scotland would also like more information on
how the new scheme will be implemented. For instance, the example
give on page 17 of the consultation booklet aims to clarify the
potential flexibilities of the new scheme but it is followed by
a general disclaimer highlighting that the details of certain sections
have still to be finalised. It would have made more sense to have
complete examples included in the document rather than this one,
which could give a false perception of how the new proposals will
work in practice.
For Further Information Please Contact:
Matt Smith, Scottish Secretary
14, West Campbell Street,
Glasgow G2 6RX
Tel 0845 355 0845 Fax 0141 342 2835
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