Government extends relaxation of NHS pension rules – DB & Derisking
The measures were launched in recognition of three scheme rules which limit the ability of some retired NHS employees to work.
The amendments suspend a 16-hour weekly limit on working hours for members of the 1995 section of the scheme, as well as barriers for certain staff aged 55 to 60, who have applied for their retirement, return to work without having their pension benefits suspended.
The Department of Health and Social Care held a brief consultation between August 28 and September 12 to consider extending these changes beyond their scheduled expiry on October 31, 2022.
While this is a good start, it provides only a small solution to some of the major labor retention issues caused by NHS pensions and taxation.
With 98% of respondents agreeing that the easements should continue beyond the end of October, the lifting of the 4 p.m. limit will now be extended until March 31, 2023. Additional proposals for its permanent removal will be made from the April 1, 2023.
The suspension of the “Abatement” for members of the 2008 Section Draw and the 2015 Plan will be suspended until March 31, 2023. In the meantime, the exemptions from the Abatement for members of “Special Class Status” will be extended until March 31, 2025.
These are mainly nurses, physiotherapists, midwives and health visitors who were affiliated to the scheme before March 1995 and who could retire at age 55 instead of 60 without an actuarial reduction in their pension.
The SCS abatement will return
The government received 1,299 responses to its consultation, including from organizations such as the British Medical Association and NHS employers. The easements were initially extended in February until the end of October.
Some respondents argued that the relaxation of the rules should continue temporarily beyond the end of March 2023, or that the rules of the affected regime should be removed entirely. Thirty-two percent of respondents agreed with the suggested length of the extension, compared to 68 percent against.
The NHS Pension Scheme Advisory Board has said the 1995 16 hour rule limiting members’ ability to work should be scrapped entirely, on the grounds that ‘it is of little practical use to staff, employers or the pension plan”.
The remaining easements are expected to be extended beyond the end of March, he added. The Royal College of Nursing was in favor of extending the easements, supporting a longer extension than those proposed.
NHS employers have backed the permanent removal of the 16 hour limit. He also argued for scrapping the rebate for SCS members beyond the end of March to give employers time to deal with arrears and find other ways to retain staff.
The government replied: “In the longer term, there are good political reasons for the abatement to apply to members of the SCS who return to work before the age of 60.
“Stakeholders have expressed concern that the eventual reintroduction of the reduction will force returning SCS members into retirement,” he continued.
“That is not the case, as it is still possible for SCS members to perform important work without exceeding their abatement cap, even for members with long careers.”
All members can work at least half-time while receiving benefits before the abatement applies, the government said.
SCS status was withdrawn from new entrants from 6 March 1995 when the NHS Pension Scheme was restructured.
“In the interest of fairness for all scheme members, it is only fair that the reduction apply to SCS members under normal circumstances,” the government said.
“Just a small correction”
The DHSC said it will table the final regulations in parliament in time for rule extensions beyond the end of October.
Quilter NHS pensions expert Graham Crossley has welcomed the extension of the changes to the reduction rules.
“However, while this is a good start, it provides only a small solution to some of the major workforce retention problems caused by NHS pensions and taxation,” he said. declared.
“We are still awaiting details of the short-term solution which will change NHS regulations to supposedly fix the”[consumer price index] disconnect’, instead of fixing the budget law, which could have fixed the disconnection of the CPI and the ‘negative growth’ for all.
“Additionally, the lack of a long-term solution also remains a concern, such as the BMA’s suggestion of a tax-unregistered scheme for older healthcare workers hit by pension taxation.”
Government to fix link to NHS inflation and mandate pension recycling
The government will fix inflation pension rules and force NHS trusts to offer pension recycling by 2023, as part of its bid to stop punitive pension rules from encouraging workers to leave the NHS.
In August, the Policy Exchange think tank called for a reassessment of the link between CPI inflation and the annual allocation for public sector pensions.
As a result of legislative changes, when the CPI increases, members are assessed based on their benefit growth, including inflation. When the CPI falls, the annual allocation growth can be negative.
“Negative growth is zero and cannot be carried forward to other pension plans in the same tax year or carried forward to prior tax years to offset historical tax charges,” Policy Exchange said.