NHS Scotland to allow staff to receive pension contributions as pay

The Scottish government has introduced an interim policy that will give highly-paid NHS staff the option to get their employer pension contributions paid to them as part of their basic pay.

It hopes that the new pension measures — which will come in from 1 December 2019 and run until the end of the current financial year on 31 March 2020 — will help NHS Scotland retain highly experienced staff.

Controversial changes made to the NHS Pension Scheme in 2016 have resulted in concerns over staff shortages as highly paid doctors have decided to reduce their hours or retire early to avoid additional tax liabilities created by the changes.

A BMA survey published in August found that thousands of GPs and hospital consultants have reduced their working hours, and thousands more are planning to cut back because of the introduction of a tapered annual allowance mechanism into the scheme in 2016.

The change has resulted in doctors whose adjusted income (net income plus annual pension growth) exceeds £150,000, facing large tax bills relating to their pension contributions as it reduces the amount of annual allowance by £1 for every £2 over £150,000.

The taper stops at a minimum annual allowance of £10,000, which is reached where there is adjusted income over £210,000.

The Scottish government has claimed that the new temporary policy will provide eligible staff with an alternative option to restricting their hours and will ensure crucial services are maintained as demand on the health service continues to increase.

The interim scheme will be available to all staff who can evidence that they are likely to breach the pension contribution annual allowance in the 2019/20 financial year.

It will provide eligible staff the option to withdraw from the NHS Pension Scheme and receive their employer contributions back as a basic pay enhancement.

Eligible staff who apply and are accepted will be paid in lieu of pension contributions and will pay tax and national insurance on this payment.

Scottish Health Secretary, Jeane Freeman, said: “Our staff are valued and they should be supported and able to work for our NHS and its patients for as long as they wish. This is just one of the steps we are taking to ensure we retain and build a sustainable medical workforce.

“This will make a significant contribution to supporting frontline services and medical specialities who are working round the clock to deliver the highest possible quality of care.

“This new option will also help to support recruitment and retention of staff, encouraging health professionals to build their careers here in Scotland’s NHS.”

The interim policy will operate while the Scottish government awaits the outcome of the current UK Government consultation into further pension flexibilities and the outcome of HM Treasury’s review of the impact of the annual allowance taper on public sector pension schemes.

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