Govt consults on 'major' NHS pension reforms

The government has launched a consultation on plans to amend NHS pension rules in an effort to retain staff and remove barriers for those returning from retirement, although it has not included any changes to the lifetime or annual allowance.

The consultation from the Department of Health and Social Care (DHSC) is seeking views on new flexibilities designed to allow retired and partially retired staff to return to work or increase their hours without having payments to their pension reduced or suspended.

As part of this, the DHSC has outlined plans to introduce a new partial retirement option to support older staff who want to work more flexibly and enable them to access part of their pension whilst continuing to contribute to their pension pot.

The proposals, which build on the actions set out in the government’s ‘Plan for Patients’ in September, also look to allow staff to claim a portion or all of their pension benefits but continue working and contributing to their pension.

This includes plans to remove the limits on hours recently retired staff can work to give them better control over the hours they work in the first calendar month after returning.

The proposals also aim to fix the unintended impacts of inflation, and ensure senior clinicians aren’t taxed more than is necessary, by enabling skilled and experienced staff to continue to contribute to the NHS up to and beyond retirement age.

This in turn, is expected to meant that more clinicians are able to provide appointments, ease winter pressures and deliver care to patients, as well the retention of crucial knowledge and experience to ensure patients are receiving first class care.

In particular, the DHSC is consulting on plans to ensure senior clinicians have more headroom against the £40,000 pension tax annual allowance, in an effort to ensure that senior doctors are either less likely to receive a tax charge, or will receive a smaller tax charge, in turn reducing the likelihood of early retirement

The DHSC also proposed allowing staff working in Primary Care Networks (PCNs), such as GPs and general practice staff, to access the NHS Pension Scheme.

The consultation will run for eight weeks, with the reforms expected to be implemented in late spring 2023.

Commenting on the proposed changes, Health and Social Secretary, Steve Barclay, stated: “The generous NHS Pension Scheme is one of the best in the country, but it’s not working as it should for everyone.

“We need a system where our most experienced clinicians don’t feel they have to reduce their workload or take early retirement because of financial worries. I also want to make it easier for staff that want to return to work to support the NHS to be able to do so without penalties.

“These proposed changes will help open up extra appointments so patients can see their GP and consultants more quickly.

"With record numbers of doctors and nurses working in the NHS alongside record funding, I’m focused on giving people the security of knowing the NHS will be there for them when they need it.”

However, British Medical Association (BMA) pensions committee chair, Dr Vishal Sharma, warned that, on the face of it, the proposed changes “appear to be too little, too late”, explaining that while they implement some of the immediate mitigations that the BMA has been calling for, they fall “well short of the long-term solution that the NHS desperately needs”.

He continued: “Doctors will continue to incur sky-high and completely unexpected tax bills, simply by continuing to provide care for patients, care that they desperately need.

“At a time when staff are facing unprecedented pressure, this is devastating for morale and it’s unsurprising that people are planning to leave in their droves.

"A recent BMA survey suggested that over 40 per cent of consultants plan to leave the NHS in some capacity over the next 12 months and the situation is just as stark for GPs and other senior doctors."

Although Sharma acknowledged that the proposals have potential benefits, and in particular will standardise retire and return arrangements, he clarified that they do not directly address the issues caused by the annual or lifetime allowance.

Sharma also emphasised that these allowances are not just issues for doctors nearing retirement, but are also increasingly influencing the decisions of mid-career consultants and GPs, for whom partial retirement would not be an option.

In addition to this, he warned that while attempts to reduce the impact of inflation may have an effect this year, doctors could be negatively hit in the future without a change to the Finance Act.

He continued: “It is essential that the government addresses the anomaly of negative pension growth which has a disproportionate impact on the public sector, due to unintended consequences of the public sector pension reforms.

"Unless addressed, this will have a huge detrimental impact on the NHS, particularly if the government follows through with its threat to impose further sub-inflationary pay awards.”

“We have consistently been clear to the government – including to the Chancellor, who himself recently described the current pensions situation as a ‘national scandal’ - about what needs to change.

"This is a change to the Finance Act and the establishment of a tax unregistered scheme for senior NHS staff, similar to the one already implemented for judges.

“In the meantime, the government must not row back on its commitment to forcing employers to offer the recycling of their pension contribution to staff who leave the pension scheme.

"This recycling must be for the full amount of the employers’ pension contributions and the government must not attempt to seek cost savings by withholding a portion of NHS staffs ‘total reward package’.”

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