Tempting offer threatens pension pots

Some NHS employers are offering nursing staff a higher rate of pay if they opt out of the NHS pension scheme for a certain period of time. It’s being used as a recruitment and retention incentive but, in reality, it’s detrimental for nursing staff in the long run.

I understand some people need the extra income but the bottom line is that nursing staff shouldn’t have to pay for their own recruitment and retention incentives by forfeiting their retirement income. 

If employers are really serious about incentivising recruitment there are lots of other things they could look at.

The employer recycles the employer contribution they would have had to pay into the pension scheme and pays this directly to the member of staff instead.

It can seem like a really attractive offer because the employer contribution to the scheme is quite large and it would make quite a difference to someone’s take-home pay. However, it makes an even bigger difference to someone’s income in retirement and this is the problem.

Coming out of the NHS pension scheme, even for a short period of time, such as two years, can make a huge difference to someone’s pension income in retirement. People will need that money when they’re not working. 

Let’s say someone in their early 20s is at the bottom of Band 5 now. They work until their normal retirement age and then live for 25 years in retirement. If they come out of the NHS pension scheme for two years then it could make a difference of at least £17,000 worth of pension benefits over their lifetime.

Also, if something happens during the time they've opted out of the scheme, they’ll receive no life assurance or survivor benefits for their loved ones. Nobody likes to think those things will happen but sometimes they do and it’s better to have that protection.

It’s a moot point. The RCN’s position is that if it’s not unlawful, then it’s certainly not good practice.

There have been cases in the past where we’ve challenged trusts which have done this and we’ve reported them to the pension regulator through the NHS Pension Board. The regulator didn’t rule on the matter but the trusts in question withdrew those incentive programmes. 

Some trusts have told us they’ve sought legal advice which said the incentive scheme was OK because they themselves weren’t benefiting financially. With these incentives, employers don’t keep any of the money they would pay into the scheme – there has to be that notion of cost neutrality.

I’d encourage reps to try to resist proposals like this by suggesting their employer explores other options for incentives.

There’s a recruitment and retention premium that NHS trusts can apply for if they’re really struggling to recruit nurses. Employers could also look at other incentives such as subsidised child care, flexible working or free car parking. We know that these are things members want. 

Data from the RCN’s recent employment survey shows that 55% of members are dissatisfied with the choice they have over the length of shift they work and 51% of members aren’t happy with their working hours. So employers could also look at shift rotations or how they organise the working week.

Yes, definitely. It was reps who helped us to challenge a scheme in London recently. If such schemes are put in place, I think reps have a really important role to play in explaining to members what these schemes really mean and what the consequences are.

Of course, members are free to make their own decision but they need to be given the details of what they’re giving up.

If you want more information or support, you can contact RCN Direct on 0345 772 6100 or your local RCN office.