NHS pension rules get an overhaul
Author: Jo Carlowe
NHS pensions rules are to get an overhaul following a year of lobbying by UK doctors.
The secretary of state for health and social care and the chancellor have today announced a number of changes, including a new consultation on full pension flexibility, a commitment from the Treasury to review the impact of the annual allowance taper, and guidance to be issued to employers setting out how existing flexibilities can be used to ensure doctors do not lose out.
The new rules will allow doctors, surgeons and other high-earning clinicians to scale down their pension contributions - without losing out on employer contributions.
The government hopes the changes will help retain the most skilled professionals within the NHS, as part of a drive to ensure sufficient numbers of clinicians to cut waiting times and improve services as part of the NHS Long Term Plan.
Commenting, health secretary, Matt Hancock said: “NHS doctors do extraordinary, life-saving work every day, and they should not have to worry about the tax impacts if they choose to go the extra mile by taking on additional work to help patients.
“These comprehensive proposals will give doctors the pension flexibilities they have called for and need to make sure they are rewarded for extra work. We are taking immediate action and I hope these flexibilities will encourage our top NHS staff to fulfil the dedication of their mission: to care for their fellow citizens in time of need.”
Today’s proposals, announced by the health secretary and chancellor, follow the commitment in the NHS’s first ever People Plan, published in June, to deliver “a fairer and more flexible approach to the NHS pension scheme for senior clinicians”.
The Department of Health and Social Care will shortly publish a new consultation document proposing wide-ranging national flexibilities to the NHS Pension Scheme.
Guidance will also be issued to employers setting out how they can swiftly provide staff with the local flexibility they need this financial year to do extra NHS work without breaching limits for pensions tax relief.
The new approach, replacing the current 50:50 proposal, would allow staff to set the exact level of pension accrual at the start of each year.
The British Medical Association (BMA) has described today’s announcement as a “step forward”, after what it described as “a year’s worth of tireless lobbying”. However, the BMA says more changes are needed in the shape of pension taxation reform.
Dr Chaand Nagpaul, BMA council chair, explained: “We acknowledge this step forward by the government. After a year’s tireless lobbying by the BMA on the damaging effect that perverse and ill-thought out tax legislation is having on our NHS, its doctors and patients, it is good to see the government finally sitting up, taking notice and proposing action.
“We said clearly when it launched that the earlier consultation on the 50:50 model – whereby doctors and employers halve what they put into their pension pots – was not fit-for-purpose and we are pleased that the government has heeded the BMA’s concerns by ditching it.
“The government has listened to us on offering full flexibility – meaning doctors can choose the amount they and their employer wish to put away – and we note the assurance that this will not mean doctors ‘losing out on the value of unused employer contributions’. This must mean full recycling of what the employer would normally contribute being paid back into doctors’ salaries.”
However, he added: “The new proposed flexibilities will provide short-term relief for many doctors, but they themselves do not tackle the core and underlying problem. This lies in tax reform, and as we have said before, it is the overhaul of the annual allowance and tapered annual allowance, that will make a difference to all doctors, including consultants, GPs and medics in the Armed Forces.
“It is positive that the chancellor has committed to review the punitive tapered annual allowance – this marks an important step-change from the government, and comes as the direct result of the BMA’s campaigning. The BMA will be glad to take up the invitation to work with the chancellor, but we will continue to argue that wider reform to the annual allowance itself is also needed to guarantee changes that will solve the problem for all doctors.”