The Department of Health and Social Care (DHSC) recently consulted on proposed changes to the NHS Pension Scheme. The proposals aim to help employers to attract and retain valuable experienced staff, maintaining the capacity required to deliver high quality patient care. The consultation will introduce some of the pension measures announced in Our plan for patients.
Our response to the consultation
We gathered the views of employers and responded to the consultation on their behalf. Thank you to all who contacted us to provide information and examples of your experiences to inform our feedback. Our response highlighted the following key points:
- Employers support the introduction of new retirement flexibilities for members of the 1995 Section of the NHS Pension Scheme. We made practical suggestions for how the changes should be implemented and administered.
- Employers support the proposed changes to ensure rapidly rising inflation is not included in annual allowance calculations. While the change is welcomed, we strongly believe more significant scheme reform is needed to ease the impact of pension tax.
- Employers feel the proposals will help to retain highly valuable and experienced colleagues, and will support workforce capacity and service delivery. The changes will ensure the NHS Pension Scheme remains an attractive and a valuable part of the Total Reward offer.
We will update employers on next steps once the consultation outcome has been published by DHSC on the GOV.UK website.
Overview of the proposed changes
The consultation set out the following proposals:
Currently, employees who have taken their pension from the 1995 section of the NHS Pension Scheme are not eligible to rejoin the NHS Pension Scheme if they return to work in the NHS. Many employed pensioners are members of an alternative pension arrangement (for example, the National Employment Savings Trust (NEST)) or no longer contribute to a pension scheme. The proposals would allow employees who have taken their pension from the 1995 section to join the 2015 scheme and build up further pension if they wish.
This will enable employers to provide a more valuable reward offer to attract and retain their most experienced staff.
Members of the 1995 section are currently required to leave NHS employment to take their pension from the scheme. Although many staff choose to take their benefits and return to NHS employment (sometimes referred to as, retire and return), this proposal aims to provide a more flexible and seamless approach, where members can draw all or part of their pension while continuing to work.
The new flexibilities aim to support employees to achieve a healthy work-life balance by working more flexibly towards the end of their careers. It is hoped this will help employers to retain their most experienced staff for longer to help with service delivery.
The proposed changes may enable staff to manage their pension tax position by choosing to claim their pension and remain in work, rather than opting out of the NHS Pension Scheme or leaving the NHS.
DHSC proposes changing the date on which NHS Pension Scheme benefits are increased with inflation from 1 April to 6 April.
The proposed change will align the rates of inflation used in annual allowance calculations with the revaluation of scheme benefits. This will ensure that the annual allowance calculations only measure pension growth that occurs above the rate of inflation.
The proposed changes aim to support the retention of senior clinical staff, who may otherwise have opted out of the NHS Pension Scheme, reduced their commitments, or left NHS employment due to pension taxation.
For members unaffected by the annual allowance, the proposed change will have no effect on the value of pension they are entitled to on retirement.
Other technical amendments are proposed to ensure general practitioners pay the correct contribution rate over the full scheme year and to simplify access to the scheme for primary care networks (PCNs).
Read the DHSC consultation in full.