• NHS trust’s cash for pension opt-out ‘undermines auto-enrolment’

  • 19 Feb 2016
  • Comments 3 comments

Deal could be referred back to pensions regulator by NHS Pensions Board

Pensions minister Ros Altmann has criticised an NHS trust for offering nurses cash if they agreed to opt out of the NHS pension scheme.

Under the deal, newly qualified nurses at the south London Oxleas NHS Foundation Trust have been offered a higher salary if they agreed to give up their NHS pension, the FT newspaper reported.

The enticement, which was created as part of a recruitment drive for Band 5 nurses, would see the pension contributions paid directly to nurses rather than into a pension pot.

However, the pensions minister and the RCN union have warned that this kind of deal could undermine the viability of the NHS pension scheme, particularly if a similar deal was offered by more NHS trusts.

Nicola Lee, employment relations adviser at the RCN, said: “There are concerns about the impact on members of staff, if they are not properly advised about the long-term consequences of opting out of a pension plan that provides both income in retirement and life assurance benefits.

“If a number of trusts were to follow suit, it would undermine the viability of the NHS pension scheme as well as the nationally agreed pay framework.”

And Paul Moloney, industrial relations manager of the Society of Radiographers and a member of the NHS Pensions Board, told the FT: “This goes much further than the NHS, because quite frankly if I was one of the 1.8m private sector employers about to begin automatically enrolling staff into a pension — and I was aware of what a taxpayer-funded organisation was able to do — then I would question why I had to auto-enrol staff.”

Altmann agreed that the deal could undermine the auto-enrolment pensions system, saying: “This new system relies on as many people as possible building up private pensions to supplement the base level of state support.

“The intention of the auto enrolment programme is clear — employers must make it as easy as possible for staff to save in a pension at work, with the help of their employer, and there are clear legal requirements that the employer must not entice them to opt out,” she told the FT.

The Oxleas NHS Trust denied that the main reason for introducing the initiative was to save money. It said: “We acknowledge that many nurses have different priorities and needs at different times in their lives and in January 2016, we began to offer a choice of a new rate of pay, that we hope will encourage nurses to come and work for us, rather than agencies.”

The employer also said that the pensions regulator had deemed its deal lawful.

However, unions said that the trust could be breaching rules on the use of enticements to get employees to opt out of a pension they had been automatically enrolled into by their employer. The FT reported that the NHS Pensions Board was considering referring the trust’s scheme back to the regulator for further scrutiny.

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Comments (3)
  • Education has to be at the root of this. I can see nurses taking the cash but once this starts the rot will set in. In the long term the NHS will pick up the bill as the pensioners of 2045 simply cannot afford to take care of themselves. The regulator should be empowered to stop this.

  • Terrifying repercussions for public sector pensions and the city where public sector pension funds are an important source of investment capital; and long term for the taxpayer. Yet also an inevitable consequence of the Government's ridiculous pay ice age - eventually permanent pay restraint changes the landscape in ways few had anticipated or predicted. With employer contributions at close on 20% and basic pay uncompetitive it is logical that someone was going to look at this. And it's not hard to see public sector workers considering it - saving for a rainy day when its pouring down now isn't the easiest sell, especially when pension education is so limited.

  • These will generally be younger people with limited knowledge of how pensions are set up and accumulate. At their age money in hand rather than a contribution to a fund that will not mature for 30+ years is taking advantage. Alongside this offer the Trust must make it clear to the nurses what the downside of this arrangement will be. I recall the old Prudential advert. At 25 the person says 'Unfortunately my job does not have a pension at 55 the person says 'Without a pension I really don't know what I'm going to do.'