Shattering ‘gold-plated’ pension myths in the health service

14 May

By James Ito

You could be forgiven for thinking that the only issue facing staff in the NHS in Scotland was an attack on their so-called ‘gold-plated’ pensions.  Unfortunately, not only is the ‘gold-plated’ description wrong, there are numerous other concerns, both local and national, facing our NHS members.  Here’s a insight for readers to consider…

Local – Perhaps the biggest impact on NHS staff are the day-to-day issues at local level.  Services are being ‘modernised’. Usually this means doing more work with fewer staff and changing the skill mix ratio to have more unqualified or unregistered staff.

Governments at UK and Scottish level have boasted that the health service budget has been protected and given increases equal to inflation. Whilst this is superficially true, it ignores the fact that ‘NHS inflation’ is higher than RPI. This is partly due to the increasing cost of drugs (new drugs for serious conditions like cancer tend to be very expensive) and partly due to the increase in life expectancy (older people need more health care for more complex conditions on average).

The end result is health boards faced with a shortfall in money compared to the service demands. They solve that problem by employing fewer staff on lower grades – resulting in staff that at best are under pressure and stressed, and at worst are bullied into lowering standards.

Pay – NHS staff have had three years of significant pay cuts compared to inflation. In 2010 most received a 2.25% pay increase when the Retail Price Index (RPI) measure of inflation was 5.3%. The following year, they were subject to a pay freeze when inflation was 5.2% and in 2012 yet another pay freeze (March RPI = 3.6%).

In 2011, the standard rate of national insurance was increased by 1% and most Unite members in the NHS have had to pay an extra 1.5% towards their pension this year (with another 1.3% average still to come). Added together this means the equivalent of a 15% pay cut for most.

For some members the position is even worse. The removal of the National Recruitment and Retention Premium (NRRP) for Estates craft workers, healthcare chaplains and perfusionists is another pay cut equating to another 15% or so for these groups.

Terms and conditions – At the Joint NHS Staff Council the Management Side have brought forward a series of proposals to reduce staff terms and conditions.

The latest proposals would reduce sick pay to basic pay only and introduce performance related pay with incremental progression being dependent on staff exceeding certain locally determined criteria. The top points would be ‘non-consolidated’ so staff on the higher pay band points could have these removed and they would not contribute towards pension benefits.

Pensions – Prior to the April 2012 increase, NHS staff contributed about £8 billion to the UK Treasury and the Treasury paid out about £6 billion. The Treasury retains the £2 billion surplus – and yet the NHS scheme is described as ‘unfunded’ as though the taxpayer was paying out instead of receiving a massive excess sum of money over expenditure.

The UK government’s current proposals are to increase most Unite members’ contributions from the previous 6.5% to 9.3% with some paying 14.5%. None of this extra money is being used to pay today’s NHS pensioners or being invested for the future.

Public sector workers are being asked to pay what is effectively an extra tax as a deficit reduction measure and nothing to do with the affordability of pensions.  As well as the increase in contributions, the government proposes to reduce pension scheme benefits by making the age at which the pension can be drawn equal to the state pension age (age 66 in 2020; age 67 in 2026) and basing the pension on average earnings throughout your career rather than final salary.

Put simply: pay more for longer; get less.

James Ito is the Vice Chair of the Glasgow Health Service Branch, currently serving Unite members in the NHS Greater Glasgow & Clyde and Forth Valley Health Boards and the Golden Jubilee National Hospital.

For the latest local and sector updated, please visit the Branch website at


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