The government has announced plans to overhaul the NHS pension scheme to tackle widespread opt-outs and workers cutting their hours by giving staff more flexibility in their retirement planning.

It has proposed changes that would allow NHS workers to choose how much income they want in retirement and to adjust their contributions accordingly.

The consultation also asks if senior staff should be able to adjust their pension growth towards the end of the tax year, as they will then know how much they have worked over the previous year, and proposes phasing the ‘pensionability’ of large pay-rises for high earners.

The Department of Health and Social Care (DHSC) has launched the proposals in an attempt to address issues within the NHS scheme, which has seen an increased number of high earning staff opt out over the tapered annual allowance.

British Medical Association (BMA) consultants committee deputy co-chair, Dr Phil De Warren-Penny, said that the organisation was “encouraged” by the consultation launch, but that “while the options within this consultation will help alleviate the issues, they will not resolve it”.

He continued: “To succeed we need to see NHS employers doing their part and recycling all of the employer contributions. If they don’t it’s still an effective pay cut for doctors for doing extra shifts.

“The real heart of the problem is the tapered annual allowance which must be removed along with the annual allowance and lifetime allowance.

“Only when these are removed can doctors return to working extra shifts to help remove waiting list backlogs and support colleagues where there are rota gaps, without fear of receiving huge tax bills.”

In the consultation, the government admitted that the tax issues facing the NHS pension scheme meant that NHS staff had started reducing their work hours, with around a third of consultants and GPs expected to be unwilling to take on extra shifts.

In the proposal, the (DHSC) added: “Building on what is already available, the department is planning to commission a modeller to help individuals assess options for using these flexibilities tailored to their personal circumstances.

“The intention is to support affected clinicians and their employers to agree programmed activities and other contractual commitments equipped with a clear understanding of their pension tax liability and how the flexibilities can be best deployed to deliver the right balance of incentives.”

Commenting on the announcement, Health Secretary, Matt Hancock, said: “Every senior clinician will be able to carry out life-saving work for patients, safe in the knowledge they have more control over their pension, their future and their retirement than at any point in NHS history.”

Warren-Penny urged the government to act swiftly, saying: “Above all, the reform needs to happen at pace.

"It cannot wait for the current turmoil in parliament to be resolved and it cannot wait until doctors have been forced to reduce their hours so much, or leave the NHS altogether that patients come to harm.

"The government must not wait until the damage is done and patients have paid the price before it implements these much-needed reforms. By then it will be too late for thousands of doctors and too late for many patients.”

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