The issue kicked off way back in March this year when Lord Hutton set out a raft of changes to public sector pensions, which included ending final salary schemes in favour of career average schemes, increasing the normal retirement age in line with stage pension age (due to creep up to 68 in the next 35 years), and increasing the amount employees pay into their pensions. Come summer the government gave the green light to Lord Hutton’s proposals and set out the details of the contribution increases for 2012-13. It has however remained tight lipped on increases planned for 2013-14 and 2014-15, which could bring the total increase in contributions up to 3.2 percentage points for high earners such as doctors. These suggestions were met with fury from the BMA, which said that doctors were being asked to pay more and work longer for a worse pension. It has also pointed out that the NHS scheme has already undergone an overhaul in 2008 and is filling the treasury’s coffers to the tune of £10.7 billion over the next five years rather than depleting stocks.
In October the government spelled out a few concessions on the pension plans to try to win over the unions, including a better accrual rate (1/60th instead of 1/65th) and protection from all the planned changes for employees within 10 years of retirement age. Then this month the government changed the level of pension contribution increases to protect a greater proportion of lower paid NHS workers but to effectively make doctors pay even more.
The proposal that employees within ten years of retirement should be exempt from changes to public sector pensions, and the decision to negotiate the various public sector schemes separately, represent very shrewd decisions on the part of the government. The first should in theory wipe out the threat of hordes of senior doctors retiring on the spot to avoid these detrimental changes to their pensions, although so far this plan hasn’t entirely worked. The second sets out something of a “divide and conquer” approach by the government, as undoubtedly some sectors will agree with the pension changes and those dragging their heels will be looked upon less favourably by the public.
All this has been against a background of other sneaky changes to public sector pensions that have attracted fewer headlines, such as the switch in indexation of pension pay outs after retirement from the retail prices index (RPI) to the typically lower consumer prices index (CPI) and a change in the amount that can be deposited in a pension scheme without paying tax (the annual allowance).
Doctors were understandably unhappy about all this and initially seemed itching to strike, but the BMA held off taking part in the national day of industrial action on 30 November. Other healthcare workers, perhaps less tightly bound by the duty to provide care than doctors, still went ahead with a national strike on 30 November regardless of the fact that negotiations with the government were still rumbling on.
Now the story has reached something of a climax, with the government throwing down its final offer on pensions, which includes most of the elements listed above as well as an improved accrual rate of 1/54th and protection of NHS pension scheme benefits should a healthcare worker leave the public sector. Healthcare unions such as Unison and the Royal College of Nursing have heralded the concessions they’ve achieved so far – in particular the protection for low earners – and said that the offer is the best they could hope for. The BMA essentially agrees, but has been at pains to emphasise that the proposals “will still hit doctors very hard.”
These next few months are where things stand to get really interesting. Healthcare unions will put the new deal to their members in January, and my bet is that members of big players such as Unison and the RCN will accept the offer, albeit narrowly. The BMA has similarly committed to consulting its members on the pensions proposals, and should doctors vote against the new offer the union has said it will call a ballot on some form of action to defend pension benefits, industrial action included.
I think it’s fair to say that doctors hate the pension proposals, not least because despite the 10 months of haggling they’re still pretty much stuck with Hutton’s original proposals – some doctors will benefit from plans to protect individuals within 10 years of retirement but few, if any, will benefit from the protection for people earning less than £26,557, and nearly all will face a bigger increase in contributions as a result of this concession.
This could leave us in the interesting position where BMA members reject the government’s offer and other healthcare unions accept it. The BMA would then be obliged to ballot on industrial action and could, in the most extreme situation, end up striking on its own without the support of other healthcare unions (although it’s very hard to predict whether doctors will actually vote for industrial action when it comes down to it). This would undoubtedly be a PR disaster for the BMA and the whole profession.
It seems like pensions will be a big story for my second year of reporting too.
Helen Jaques is news reporter and deputy editor, BMJ Careers