The Department for Health and Social Care is proposing to “fix” NHS pension rules so staff are not incentivised to retire early or reduce their hours as the UK health service is heading towards a winter crisis. 

 

In a consultation launched on Monday, the government is proposing new flexibilities to allow retired and partially retired staff to return to work or increase their working hours without having payments to their pension reduced or suspended.  

 

The proposals will protect doctors and nurses from “excessively high tax charges”, the department said, and will be “boosting the workforce as the NHS continues to take action to tackle the Covid backlogs”. 

In August, the NHS employed 1,230,089 full-time equivalent staff, 2.6% (31,343) more than a year earlier.

 

Health and social secretary Steve Barclay said the “generous NHS Pension Scheme is one of the best in the country, but it’s not working as it should for everyone”. 

 

The reforms aim to ensure senior clinicians have "more headroom against the £40,000 pension tax annual allowance”, making it less likely that they will incur a tax charge. It is doing this by moving the date that the yearly in-service revaluation is applied to 2015 Scheme earned pension from 1 April to 6 April, aligning the consumer price index rates.

 

In addition, GPs and their practice staff will be given access to the NHS Pension Scheme, while previously they had to apply for time-limited access on an ad-hoc basis. 

 

The consultation also proposes 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 the scheme. This would also allow those that have already retired to return to the workforce. Under the reforms, retired staff would be able to re-join the pension scheme. 

 

No mention is made of the lifetime allowance, frozen until 2026 at £1,073,100.  Like the annual allowance, the LTA’s effect is felt mostly by high earning public sector employees. 

 

The new measures will make further concessions to doctors who have been campaigning vociferously about pensions taxation. Doctors’ union the British Medical Association has been calling for a tax-unregistered scheme, such as that for judges. 

In 2020, the government lifted the income threshold for the tapered annual allowance to £200,000 from £110,000 and the adjusted income to £240,000. Last September it also said that members could in future opt out of the NHS scheme, taking the employer contribution as cash.

 

The new consultation runs for eight weeks, and the government said reforms are expected to be implemented in late spring 2023.

   

What do you think – will this latest pensions change work to address workforce issues in the NHS?