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'Sneaky' pension changes will 'wipe out' pay rise for nurses

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The changes to pensions could remove any uplift in The changes to pensions could remove any uplift introduced by the 1% pay rise

Some nurses could see an effective cut to their take home pay due to changes to state pensions in April.

The state second pension will merge with the basic state pension. Currently, employees get a national insurance rebate of 3.4% for contracting out of the second state pension to enter final-salary schemes, which are more prevalent in the public sector than in the private sector. The changes to the state pensions will remove this, meaning that employers such as the NHS will have to pay a higher rate of National Insurance.

‘The introduction of the new state pension will have an impact on some nursing staff as there will no longer be a state second pension,’ said Gerry O’Dwyer, senior employment relations adviser for the Royal College of Nursing (RCN). ‘It will affect those who were contracted out of the state second pension through their membership of an occupational pension scheme like the NHS Pension.

They will see a rise in their national insurance contributions due to the removal of these contracting out arrangements. This rise will wipe out any effect from the recent meagre 1% pay rise.’

Jon Skewes, the Royal College of Midwives’ (RCM) director for employment relations said that the move was ‘sneaky’ and that it amounted to ‘giving in a very limited way with one hand and taking away with the other via taxation.’

The move has provoked criticism, with opponents saying that the move is an effective cut of more than £600million to NHS finances, as it moves the burden of paying for pensions from the Treasury onto employers such as the NHS.

‘Even by George Osborne’s standards, this is a vicious attack on our health service, schools and public services,’ said Tim Farron, leader of the Liberal Democrats. ‘He made grand promises about funding the NHS and is now making secret cuts by the back door. David Cameron said he would do whatever it takes to fill the NHS black hole, and we’ve now discovered that actually means cutting £650million just to help the Chancellor’s budget-day balance sheet.’

The RCN and RCM are able to give advice to members on pensions and other financial matters.

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