I read the Department of Health consultation document on the NHS Pension Scheme this week. My first impression was that this was science fiction, my second that this was fiction but not scientific, more a mystery novel, the mystery being where did they get their facts from?
Information on Public Sector pensions is hard to come by; there are no published accounts, required by the State for all other schemes. One would therefore expect the consultation proposals for major increases in member’s contributions to be supported by good accounts.
The Case for increasing contributions states in the first sentence “expenditure on public service pensions over the last decade has increased by one third to £32bn”. The GAD 2009 report gave the 2008 pensions paid for the four main schemes at half this value at £16bn; the Hutton report projected forward at £25bn including Local Government scheme . So who is spending £32bn?.
It gets better, or worse, depending on your viewpoint, the next sentence states that we are all living longer than previous generations, true, but then justifies this with 60 year old living ten years longer. Proposals are to increase retirement age to 65, so where is the relevance?
Between 40 to 45% of adult life is then claimed to be spent in retirement, we should be so lucky! Assuming adult life starts at 16 then working life at 65 is 49 years (44 for 60), then we can expect some 40 years of retirement ( 36 years at 60). We shall enjoy life on our 105th birthday!
Currently life expectancy at 65 is 20 years, so half of us will be alive at 85, few of us will live beyond 95, so this statement is rubbish! It is also stated that members will draw NHS pension for between 24 to 27 years.
We then go on to state pensions are costing more and these costs have generally fallen to the taxpayer, again untrue. The State bible on costs, the 2010 Blue book give PS contributions in 2008 at over £20.65bn, some £4bn greater than the pensions paid, with most of this surplus being in the NHS. The contribution breakdown indicates Employers at 8.9%, Employees at 6.5% and Social (SERPS) at 5.1%.
The new rates bring Employees to the same contributions as Employers, although this is quoted at 14%, which includes SERPs, effectively an employee contribution for loss of second State pension.
Retirement Pension expenditure is given for 2009 at £60.48bn which includes State pensions, given elsewhere as £45 to £50bn, again showing PS pensions within their means and no taxpayer burden.
The document then compares benefits with the new contributions on a pound to pound basis, which is as clear as ditchwater and meaningless, being based on incorrect data. After 40 years service with pay at £25,000 this shows a pension of £12,500 per year. GAD shows average NHS pay at £23,600 and average pension at £6,000.
The consultation document is not worth the paper it is written on and is an insult to the intelligence of NHS scheme members. If this is the standard in the Department of Health then it is no surprise that the NHS is in such chaos. The only real solution is the breakaway to a fully funded scheme free of the State.
All doctors, nurses and other workers should write or E-mail the DoH with their objections in the strongest terms, demanding an independent pension scheme and full current accounts, It would not hurt to do the same to your MP, the Minister and even the Prime Minister in the same vein. They cannot ignore 1.6 million members.
It is your pension savings they are mishandling and your pension future at risk; such savings are being criminally misused to pay existing pensions and subsidise other public sector workers. The NHS pension scheme is healthy and in surplus, but will not stay so for long in the present hands.
Apologies for the necessary number detail but the next blog will try to make pensions simpler!
Savings Annuities Public Sector NHS Teachers Police Local Government Hutton State
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