• Nine senior NHS directors opted out of the NHS pension scheme in the last financial year
  • NHS Employers has previously warned high earners leaving could destabilise the pension scheme
  • NHS England, BMA and health secretary lobbying for changes to the tax allowance cap

Nine of the most senior directors in the NHS opted out of the NHS pension scheme in 2017-18, HSJ has learned.

Annual accounts reveal six NHS England board members and three senior directors at NHS Improvement chose not to contribute to the pension scheme.

According to NHS England’s accounts, the six board members were the current national director of operations and information Matthew Swindells, national director for transformation Emily Lawson, and national medical director Stephen Powis; and the former chief nursing officer Jane Cummings, medical director Sir Bruce Keogh, and chief financial officer Paul Baumann.

NHS Improvement’s annual accounts revealed the three executive directors were regional director for the south east Anne Eden, outgoing executive director of regulation and deputy chief executive Stephen Hay, and outgoing medical director Kathy McLean.

NHS England and NHS Improvement both declined to comment when HSJ asked why the directors had opted out of the pension scheme.

But their decisions come amid rising numbers of opt-outs, particularly among more senior staff, who are at risk of hitting the lifetime allowance for pension tax relief.

In April 2016, the government dropped the lifetime allowance – essentially a cap on the amount somebody can draw from their pension before being hit by additional tax charges – to £1m from £1.25m. It was increased slightly to £1.03m in April 2018. Other pension tax rules have also been changed.

It is not known if the lifetime allowance change is the reason for the nine executive directors choosing to leave the pension scheme.

NHS Employers warned in its submission to the NHS pay review body that the pension scheme could be destabilised following an exodus of high earners. It called for the Treasury to review the impact of pensions tax rules. 

HSJ revealed last year a quarter of a million NHS workers had opted out of the pension scheme over the past three years, with experts blaming a “punitive” government tax regime and the current cost of living.

Health and social care secretary Matt Hancock has previously acknowledged the issue and revealed he was in discussions with the Treasury over the pension tax rules, which he accepted were affecting the retention of NHS GPs and other staff.

In their recent five-year contract for GPs, agreed last month, NHS England and the British Medical Association agreed to make proposals to the government to make changes to the regime, over fears GPs were being incentivised to reduce their working hours or retire early to avoid breaching their annual allowance. 

The annual allowance acts as a limit on the contributions people can make to their pension each year which attract tax relief. For most people, this is £40,000, but this amount is tapered when somebody earns more than £150,000. 

When the GP contract was launched, NHS England national director of strategy and innovation Ian Dodge said: “We have asked [the government to introduce for GPs] an equivalent partial pension scheme to the local government scheme where there’s a 50 per cent pension option, so you can continue to provide a 100 per cent time commitment [but] choose to reduce your contributions and your benefits accordingly.

“[That is] rather than the perversity of the current arrangements where people might try to reduce their time commitment to the NHS, which is the very last thing we want to see, partly because of their fear of being caught by the annual allowance cap.”

NHS England’s annual accounts also revealed Sir Bruce Keogh received an overpayment of £42,818 “paid in error between 1 April 2015 and 31 January 2016”. The accounts added this was fully recovered in the 2017-18 financial reporting period.