Hospitals told to pay staff cash in lieu of pensions

The NHS regulator has written to UK hospitals instructing them to pay doctors additional salary in lieu of pension contributions to stifle the ongoing pension crisis.

In a letter seen by the Financial Times, NHS Improvement said that cash in lieu of pensions has been “among the most effective” and that it expects hospitals proceed with this method.

The pension crisis affecting the NHS has seen large scale opt outs and doctors unwilling to take extra hours due to pension tax policy.

The government has faced repeated calls to scrap the tapered annual allowance and simplify the pension tax system to halt the exodus, with the British Medical Association describing the flexibility proposals as “a sticking plaster”.

In the letter, NHS Improvement stated: ”We can confirm that of the options set out by NHS Employers, among the most effective have been local policies on payment of employer contributions foregone as additional salary where scheme members have elected to opt out of the scheme due to tax arrangements.

“We are now signalling our expectation that trusts that have not done so already should make immediate use of the flexibilities available (unless they are demonstrably not experiencing any issues with medical staff availability).”

However, the NHS Confederation said that it did not plan to change its guidance on paying cash in lieu of pensions, and that its stance that the flexible payment option is voluntary would remain.

NHS Confederation chief executive, Niall Dickson, said: “As the NHS hurtles towards another monumentally busy winter period, we are facing a ticking timebomb where vital shifts might not be filled because of the ongoing pensions crisis.

“We welcome the Department of Health and Social Care’s commitment to introduce changes to the NHS pensions scheme for senior doctors but we cannot afford to wait until April for these to be rolled out.”

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