Nurses to feel the pinch from state pension shake-up
Exclusive - NHS nurses could lose the value of any pay rise thanks to national insurance hike
NHS nurses could lose the value of any NHS pay rise from April because of major changes to state pension and national insurance contributions.
Members of the NHS pension scheme earning between £155 and £770 a week will have to pay an extra 1.4% in NI contribution next year.
With the government saying it will not fund a pay rise that adds more than 1% to the annual NHS wage bill, the loss could effectively erase any pay award for nurses.
From April, the government will change the state pension, which is currently split into two parts – the basic state pension, which has a fixed maximum, and the additional state pension, which is calculated on the individual’s overall NI contributions and salary.
Members of public sector pension schemes – including NHS workers – do not get the additional state pension.
Instead, based on current tax thresholds and rates, for any weekly earnings between £155 and £770, they pay a NI contribution of 10.6% instead of the standard 12%.
The NHS gets a rebate too. For all employees in its pension scheme earning £156 a week or more, it pays a contribution of 10.4% instead of 13.8%.
But in April, the government will introduce a single pension and the rebate elements are to be scrapped – placing an ‘incredible’ financial burden on the health service, according to healthcare unions.
Using the average salary of NHS staff as the basis of its calculations, Unison has estimated the change could cost the health service around £1.1 billion a year – which would account for a significant proportion of the extra £8 billion pledged by the government to shore up NHS finances by 2020.
Unite national officer for health Barrie Brown said unions, including Unite, Unison and the RCN, have formally raised the issue with NHS employers.
He said: ‘When you take an additional £1.1 billion, against the problems already faced by the NHS, it is an incredible burden.'
The Department of Health said it is awaiting the government’s spending review on November 25 to see what the additional costs for the health service will be.
Read the full story in this week's Nursing Standard journal.