As an effect of Agenda for Change a small minority of members face the prospect of their earnings being frozen for a period and possibly at some point of being reduced. For others, while total earnings may not be affected in this way, there is the probability that their pensionable earnings could be reduced. We have been discussing these possibilities with the Department of Health and Pensions Agency in order to minimise the effect on member’s pensions.
Under the Pension Scheme rules members whose earnings are reduced via an employer-initiated change can opt for pension protection whereby their pension is calculated as the better of a pension calculated in the normal way and a pension calculated as the sum of the pension earned up to the point earnings are reduced and the pension earned in the period after earnings are reduced.
We have now got an understanding to the effect that a freeze on earnings is being recognised as a reduction for the purposes of protection, that in the event of a freeze followed by a reduction protection may be calculated on the basis of the separately calculated amounts if that is advantageous and that members will be registered for protection by their employers rather than having to apply.
We have also got an understanding that a reduction in pay can mean a reduction in pensionable pay. This will help safeguard the position, for example, of staff whose earnings are restructured on account of a change in the system of payments for on-call work.