NHS Pension Scheme opened up to private sector

Private companies are to gain access to the NHS Pension Scheme as the government seeks to ‘level the playing field’.

In a recently published consultation document, the government unveiled plans to allow private providers of health service funded care to gain access to the NHS Pension Scheme (NHSPS), a move it hopes will create a “truly plural NHS market”.

Currently, private providers struggle to access the NHSPS due to being forced to make higher contributions to offer comparable pensions to their staff – 40% compared to the 14% paid by NHS employers.

Under the proposed changes, the cost for private sector companies and NHS providers will become equal, raising the competition and allowing the private sector to offer their employees similarly attractive salary and pension schemes.

The government’s proposals, which they say will encourage staff mobility and remove the ‘tilt’ towards NHS jobs, are changes that were recommended by the Staff Passport Group compromised of the Treasury, the Department of Health, the NHS and private companies.

While some in the industry have questioned whether such a move to deny the NHS its major competitive advantage over the private sector is wise, others have praised the changes as improving standards across the board.

Monitor applauded the move to “promote a fairer playing field”, while Health minister Dan Poulter suggested the changes could also save money and would allow private providers to offer patients “the best choice of services, and recruit and retain the highest quality professional staff.”

Poulter also pointed out that removing the exclusivity of the NHSPS would “encourage more independent and voluntary sector providers to bid for public sector contracts.”

Other proposed changes to the NHSPS, as outlined in the recently published consultation document, include charging penalties to employers for late payments and capping benefits for staff who receive large wage increases in their final years of employment.

The proposals are now up for consultation, with a view to implementing the new rules from April 2014, although the scheme will be regularly reviewed to assess the impact on the workforce.