By Accountable Care Journal-
The Department of Health and Social Care has launched a consultation on proposals to make the NHS Pension Scheme more flexible.
Concerns were raised earlier in the year about the impact of changes to pensions taxation for senior clinicians and GPs that meant taking on extra work resulted in higher tax bills. In the current environment of workforce pressures within the NHS, there is widespread criticism of any disincentive to senior clinicians taking on extra work.
The Department of Health and Social Care is aware that some clinicians are considering reducing their workload and turning down additional work to slow down the rate at which their NHS pension grows each year. This is because they don’t want to breach their annual allowance of up to £40,000. The tapered annually allowance, introduced in 2016, reduced the amount that high earners can save into their pensions tax-free. However, has resulted in some facing significant bills.
Around a third of NHS consultants and GP practice partners have earnings from the NHS that could potentially lead to them being affected by the tapered annual allowance.
The NHS People Plan set out a new approach to the NHS Pension Scheme. However, this consultation is asking for feedback on a new 50:50 option which lets clinicians halve their pension contributions in exchange for halving the rate of pension growth.
The objective is to allow greater flexibility to give clinicians more control over their pensions growth and tax liabilities to avoid them cutting their hours.
Currently, every clinician has an option not to pay any tax upfront on money that is saved into their pension. Instead, they can choose for the NHS Pension Scheme to pay the tax bill now, and the scheme will then recoup the tax, plus interest, by taking it off their pension fund at retirement. This is known as ‘Scheme Pays’.
The consultation proposes to make Scheme Pays more transparent, so staff can better assess how deferring payment will affect their pensions, says the government.
Matt Hancock, Secretary of State for Health and Social Care, said that "too many of our most experienced clinicians are reducing their hours, or leaving the NHS early because of frustrations over their pension."
"It’s vital any changes are based on real experiences and I urge all consultants, senior nurses and GPs to have their say, he added."
Meanwhile, Danny Mortimer, Chief Executive of NHS Employers, welcomed the consultation, which he said showed a 'willingness' and 'commitment' from government to address the negative impact of pensions on NHS staff and organisations. NHS Employers is leading on the development of a recommendation on introducing scheme flexibilities, as part of the Scheme Advisory Board.
The BMA, which has been lobbying for reform, says it is highly sceptical of the content of the consultation, with the doctors’ union warning that the proposals 'must result in tangible reform' or 'there will not be an end to the current crisis. '
The BMA claims that 50:50 will not solve the problem, simply that doctors will reduce their pension contribution to 50 per cent and recieve just half of their normal pension growth in return. "The BMA believes the only real solution is to scrap the annual or tapering allowances with immediate effect," says Dr Rob Harwood, chair of the BMA consultants committee.
The consultation will run until 14 October 2019 can be responded to here.
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