DHSC reveals new measures to tackle NHS pension issues

The Department of Health and Social Care (DHSC) has announced plans to change elements of the NHS Pension Scheme, in an effort to help retain doctors, nurses and other senior NHS staff, and increase capacity.

Introducing the policy paper, Our plan for patients, Health Secretary, Thérèse Coffey, stressed that a “true national endeavour” is needed to tackle the NHS backlog, supported by efforts to “make it easier” for clinical professionals to help the NHS.

As part of this, Coffey said that the DHSC has dedicated itself to “correcting” NHS pension rules regarding inflation to retain more senior NHS staff.

The paper also included measures to "encourage" NHS trusts to explore local solutions for senior clinicians affected by pension tax charges, such as pension recycling.

In addition to this, it outlined plans to implement permanent retirement flexibilities and extend existing temporary measures to allow more experienced staff to return to service or stay in the service longer.

Despite the new measures, the British Medical Association (BMA) has argued that further changes may be required, particularly in relation to the Finance Act.

Proposed changes to the Finance Act were recently raised in a letter to the government, written prior to the Our plan for patients policy paper, in which BMA chair of council, Philip Banfield, called for measures to be taken to avoid a loss of NHS staff over pensions rules.

One of the issues identified by Banfield was the annual allowance which, due to anomalies within the Finance Act, means that “doctors will be taxed on non-existent pension growth if inflation normalises, but this tax will remain payable despite the value of the pension falling in real terms”.

Whilst Coffey has committed to correcting pension rules around inflation there is no word yet whether this will be achieved through an amendment to the Finance Act, as proposed by the BMA.

Furthermore, commenting in response to the Coffey's plan, BMA GP committee chair, Dr Farah Jameel, stated: “Without concrete action on recruitment and retention - most urgently an amendment to the Finance Act to address the perverse impact of inflation on pensions, leading doctors to retire early this year – we are simply not going to have the numbers to provide any service let alone fulfill any of the ambitions stated here.

“If the new Health Secretary had met with us before this announcement we could have suggested a workable strategy to address the unfolding crisis before us for this winter and beyond – instead we have in reality minor tweaks that will make no tangible difference to patients struggling to access care.”

More broadly, the BMA also called on the government to repeat the 2019/20 annual allowance compensation scheme, due to the “urgent nature” of inflation’s effect on pensions.

In addition to this, the letter requested a meeting between the BMA’s Junior Doctors Committee and the new health secretary to discuss a full restoration of junior doctors’ pay to levels equivalent to 2008/09 under the threat of industrial action.

Industry experts have also suggested that changes may be needed more broadly, with Hymans Robertson partner, Chris Noon, suggesting that the Treasury should "dust of the review of pension taxation that it came close to implementing in [2016].”

“Interventions like this continue to highlight the inappropriateness of the pension taxation system," he continued.

“The complications of the annual and lifetime allowances make it difficult for many individuals to save for retirement and ultimately have political consequences like we have seen with NHS staff in recent years."

Adding to this, Quilter NHS expert, Graham Crossley, noted that while the NHS faces issues around inflation "severely", there are other CARE schemes that also grapple with problems it, arguing that "the government should avoid playing favourites with any fix and apply it across the board".

    Share Story:

Recent Stories

Are current roads into retirement delivering member value?
Laura Blows explores HSBC Master Trust’s recent report, Converting pension pots into incomes, with HSBC Retirement Services CEO, Alison Hatcher.

Savings and finance at retirement
Laura Blows is joined by Claire Felgate, Head of Global Consultant Relations, UK, at BlackRock, to discuss savings and finance at retirement. Please click here for an edited write-up of the video

Making pension engagement enjoyable through technology
Laura Blows speaks to Nick Hall, business development director and Chartered Financial Planner at UK-based Wealth Wizards about the opportunities that technology provides for increasing people’s engagement with pensions and increasing their retirement wealth. Please click here for an edited write-up of the video

Pension portfolios – the role of asset-backed securities
Laura Blows is joined by Royal London Asset Management (RLAM) head of sterling credit research, Martin Foden, and its Senior Fund Manager, Shalin Shah to discuss the role of asset-backed securities (ABS) within pension fund portfolios
Incorporating ESG into fixed income
Laura Blows is joined by TCW head of fixed income ESG, Jamie Franco, to discuss incorporating environmental, social and governance (ESG) strategies into fixed income portfolios