New pensions law is wrong, says health chief

A NEW law that means thousands of NHS Lothian staff will be enrolled in a pension scheme for the first time has been slammed by the health board’s chairman, amid fears it could harm the poorest workers and leave the service with a multi-million pound bill.

The Westminster-driven legislation will mean that most UK workers will be automatically enrolled in a pension scheme, while previously they had to apply or may not have had the chance to join one at all.

The scheme has been hailed as a way of helping people save for their futures, but NHS Lothian chairman Dr Charles Winstanley described it as bureaucratic and warned that it may harm hard-pressed workers in the health service.

It is also set to leave the cash-strapped health board with a bill of up to £8 million per year, as it will be forced to pay more employer contributions into pension pots.

Dr Winstanley said: “It would seem to me that this well-intentioned legislation is creating bureaucracy and disquiet. We are being faced with a bill that we may struggle to meet but won’t necessarily help the workforce.”

Auto-enrolment will apply to all UK workers aged 22 or over who earn more than £8105 a year and are not already in a pension scheme.

However, as all NHS Lothian staff are already offered the chance to enter its pension scheme, fears have been raised that those who have deliberately not joined as they can not
afford to could find their meagre pay packets cut.

The health board said it tried to negotiate a long-term deferment in entering the auto-enrolment structure, but the move was blocked by unions.

Alan Boyter, NHS Lothian’s director of human resources and organisational development, said: “There will be costs to the organisation relating to employer contributions. If everyone decided to stay in the scheme, it would cost £8m, although it is unlikely that all staff will.”

The health board has set aside £4m to fund increased pension contributions in the next financial year, although Mr Boyter admitted that the presumption that half of workers would opt out was little more than “a guess”.

NHS Lothian is to inform staff how to opt-out before cash is taken from wages, although once they begin paying contributions they will have to go through the Scottish Public Pensions Agency to withdraw.

Tom Waterson, Unison branch chairman for Lothian, said that unions had offered to allow a deferment of auto-enrolment if the NHS had agreed to help employees with 
increases in pension contributions. He said: “This should have come as no surprise to the health board, it’s been known for quite a while that automatic enrolment is coming in.

“We went to the NHS with a view that if they assisted with the increases in pension contributions, which is an extra tax going to the government, we would agree a deferment, but they refused. Now they’re moaning about having to pay the extra money. We support auto-enrolment and believe everybody should be in a pension scheme.

“Obviously, there is a problem with lower paid staff being able to afford to be in a pension scheme, but maybe it’s up to NHS Lothian to do something about the paltry wages.”

THE BIG SHAKE-UP

AUTO-ENROLMENT has been hailed as “the biggest shake-up in UK pensions for over a hundred years”.

It affects all UK workers over 22 and will initially affect large employers, but will expand to every firm by 2017.

Under the standard auto-enrolment pension, employees will eventually pay four per cent of wages, with employers adding three per cent and the government one per cent as tax relief.