- Government publishes fresh proposals amid increasing reports of staff refusing extra work
- DHSC says third of consultants and GPs may be less inclined to take on extra shifts because of current pension rules
- Subject to consultation response, changes will be implemented in time for start of next tax year
Senior doctors and nurses will be allowed to set their own level of pension contributions each tax year under government proposals to tackle the pensions crisis gripping the health service.
Ministers are expected to unveil an eagerly-awaited consultation on reforming the pension rules for the NHS today, after growing concerns in recent months that doctors are reducing their hours and retiring early due to pension tax costs.
The government has estimated a third of consultants and GPs may be less inclined to take on extra shifts because of “how the NHS Pension Scheme interacts with the wider pension tax rules”.
The Department of Health and Social Care said in an advanced release that it would today set out a range of possible new measures, including allowing GPs, senior nurses and consultants to set their own bespoke pension growth level at the start of each tax year and pay correspondingly lower contributions.
This level would be a percentage of the normal scheme contribution in 10 per cent increments – such as 30, 50 or 70 per cent of the full accrual level.
Other proposals include:
- An option to alter pension contributions, including topping up pensions, towards the end of the tax year, when the individual has a clearer idea of their tax situation; and
- Individuals who receive a large pensionable pay rise being able to phase, over several years, the amount by which their new pay contributes to their pension.
The DHSC said it will also develop a tool to help clinicians tailor the new flexibilities to support their own individual circumstances and preferences.
It added, subject to the consultation outcome, the government will work to implement the changes in time for the beginning of the new tax year. Full consultation details were not available at the time of writing.
This is the government’s second attempt to consult on NHS pensions. Earlier this year, it announced, but subsequently dropped, plans to consult on a 50:50 option, which would allow clinicians to halve their pensions contributions in exchange for halving the rate of pension growth.
Danny Mortimer, chief executive of NHS Employers, said in the release that the new proposals “helpfully acknowledge” the need for more flexible schemes, “over and above” the 50:50 system, to help senior clinicians manage their pension growth within current tax laws.
He added: “The consultation recognises the importance of the work of the Scheme Advisory Board, through which NHS Employers and our trade unions are leading the development of a recommendation on introducing scheme flexibilities for the benefit of all NHS staff.
“Employers continue to believe the greater scheme flexibilities are needed for all areas of our workforce.”
Health and social care secretary Matt Hancock said the proposal was the government’s way of taking a “decisive step” in fixing the problem, adding: “To make sure we get this right, however, it is vital we learn from the experiences of our dedicated frontline staff, so I urge them to have their say.”
Since 2016, the annual allowance taper has restricted the amount of tax relief available to those with a threshold income over £110,000, reducing it from £40,000 to £10,000. However, concerns have been raised these rules have left those in the NHS pension scheme with unexpectedly high tax bills, encouraging some to opt out of the scheme, turn down additional work or leave the health service altogether.
DHSC press release