Following a Government consultation, the threshold for freezing pension contributions will be raised from £15,000 to £26,557 for 2012/13, affecting 630,000 staff in the NHS in total - almost half of all those in the NHS Pension Scheme.
This change has been designed to protect the lower paid in the NHS. The increases in employee contributions have been distributed among higher earners where they will be significantly offset by the benefit of tax relief for higher rate taxpayers. So someone earning £60,000 would no longer contribute less as a proportion of their salary towards their pension after tax relief than someone earning £15,000.
Health secretary Andrew Lansley said: "Having listened to staff and stakeholders, we have improved our proposals so that an extra 530,000 NHS staff will not pay any more into their pensions next year.
"Public service pensions will remain among the very best available, providing a guaranteed pension level for all employees - today very few private sector employers still offer this. But people are living longer and pensions are costing taxpayers more and more every year.
"These changes alone will not be enough to ensure that NHS pensions are affordable in the long term. We are continuing to discuss wider changes to pensions with Trades Unions and hope to reach an agreement by the end of the year. But we are clear that people will also keep whatever they have already earned. We will honour in full benefits earned through years of service - which means little, if any, change for those close to retirement."
But trade union Unite has said thousands of middle-income NHS employees will be subject to 'a smash-and-grab' raid by the Treasury, under the proposals.
Unite, which has 100,000 members in the health service, said that thousands of health visitors, speech-and-language therapists, biomedical scientists and pharmacists will lose out and pay hundreds of pounds more in pension contributions next year.
Under the Government's proposals announced today anyone earning less than £26,500 will not pay more for their NHS pension in 2012, however, Unite said that it is not clear what was going to happen in the following years.
Unite assistant general secretary, Gail Cartmail, said: "These are tawdry 'divide-and-rule' tactics designed to set one set of dedicated hard-working NHS workers against another.'
"Once again the government is attempting to mislead the workforce and the public about the true impact of their proposals. The harsh reality of what the government is pushing today is that middle earners - the 'squeezed middle' of health visitors, speech-and-language therapists, biomedical scientists and pharmacists - will be the ones paying for these increased contributions in this 'smash-and-grab raid'.'
"This increase will range between 1.5% - 2.4% which has to be seen in the context of a public sector pay freeze.'
"This is an unfair tax on middle earners, as the revenue will go straight to the Treasury to pay off the national budget deficit caused by the banking elite and not ploughed back into the scheme.
"In its haste to sell this as good news, government is also failing to state what it plans for years two and three. It will press on as before, so this is a swindle and a short-lived one at that.
"Further, ministers must stop bypassing the agreed negotiating channels.'
"The correct place to discuss proposals is around the table, not via the airwaves. This is another cynical attempt to turn the public away from supporting those who deliver their services. It won't succeed.'
"It should not be forgotten that the NHS pension scheme is self-funding and at present collects £2 billion more in contributions than it pays out in benefits."
