• New guidance published by NHS Employers on mitigating impact of pension tax on their staff
  • Includes advice on management of pensionable pay and time off in lieu arrangements
  • Guidance is intended for 2019-20 financial year ahead of new national approach

Trusts have been advised to consider offering doctors time off in lieu to help them avoid pensions tax in new guidance from NHS Employers. 

The 15-page document also said trusts could determine more elements of doctors’ pay as non-pensionable, manage multiple contracts for individual doctors to cut pension tax exposure or pay staff’s employer contributions as extra salary if they opted out of the scheme. 

On TOIL arrangements, the guidance noted such measures would not “directly increase the available capacity” but could be “a useful tool to help employers redistribute capacity to ease pressures on service during exceptionally busy periods”.

The document, published on Monday, said: “There are increasing reports that NHS employees are turning down additional work, requesting to reduce their working hours and retiring early due to concerns about pension tax. This is having a significant impact on workforce supply, staff retention and service delivery.

“This guidance has been prepared to help you support staff who are likely to be affected by pension tax issues. It is intended to support the announcement that gave employers permission to implement a number of optional, temporary measures locally.”

The document also suggested individuals who are unlikely to be affected by the controversial tapered annual allowance may be refusing additional work unnecessarily due to their “lack of understanding”.

NHS Employers said its research showed there was a “clear lack of knowledge and understanding” about the NHS Pension Scheme and associated tax issues among some staff. It encouraged employees to seek independent financial advice while saying employers could signpost relevant resources and information.

National solution needed

Danny Mortimer, chief executive of NHS Employers, said NHS Employers would submit a response to the government’s upcoming consultation once it was published. He said they believed scheme flexibilities were required “for all areas” of the workforce.

He added: “We would also echo the NHS Confederation’s clear call for the taper applied to pensions tax relief to be removed.

“This is the most effective, long-term solution for those colleagues impacted by the annual allowance tax demands, and we look forward to discussing that with HM Treasury.”

Miriam Deakin, NHS Providers’ director of policy and strategy, welcomed the guidance from NHS Employers but called for a national solution.

She said: “While it is useful for employers to have this guidance from government over the local flexibilities they can undertake, if appropriate, trusts overwhelmingly want to see a national solution to the NHS pensions crisis.

“The new speed and focus from the government on solving this issue is really welcome, as is the commitment to review the annual taper, but the forthcoming consultation and review need to be completed quickly.

“Staff are unlikely to stop reducing their hours or refusing additional work until we have a clear, definitive solution fully in place.”

Consultation awaited

The new guidance is intended for the current financial year. NHS Employers said local arrangements need to be reviewed from April 2020 onwards as employers wait for the government to reveal more details on its pensions consultation, which was announced last month.

Health and social care secretary Matt Hancock said: “We will be consulting on comprehensive changes which aim to resolve clinicians’ pensions concerns so they can better balance their pensions while spending more time with their patients in hospitals or GP surgeries.

“But we also recognise immediate action is needed to help fix this and minimize the impact it is having on our NHS.

“Today, we are giving trusts the tools they need to grant maximum flexibility to their staff right now, alongside tailored support so every top clinician can continue to care for their patients without worrying about the impact on their pension.”

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 as little as £10,000.

Last month, HSJ reported consultants at Luton and Dunstable University Hospital Foundation Trust had been offered time off in lieu after an “exponential increase” in doctors indicating they would stop carrying out additional sessions over pension tax concerns.