LATEST DEVELOPMENT 8/8/2019:
The Government has outlined new proposals for dealing with NHS pensions tax concerns. The current consultation allowing staff to reduce contributions and benefits to 50% will be abandoned. The full consultation will be published in due course. It’s expected to come into force from April 2020, perhaps before.
It will apparently only apply to clinicians, not other NHS employees, although the tax thresholds can also affect them (and indeed other public sector workers). This may in itself create questions of equal treatment across the NHS workforce.
Qualifying staff will be able to set their own contribution levels so as to avoid tax thresholds. This can include making zero contributions. It should be possible for employers to pay staff the money the employers save in pension scheme contributions too.
We’ll need to see the full proposal, but this seems a step forward from the previous 50/50 proposal. In particular, if staff can remain current members of the NHS Pension Scheme, that will protect valuable benefits, such as on death in service, that change if employees pull out of the Scheme. We’ll comment further when we have more details.
The Government may also issue some guidance to NHS employers on what to do in this financial year.
Original article 25/7/2019:
A number of Trusts are finding that their staff, particularly senior and long serving medical staff, are refusing additional hours – and we know the NHS relies on the goodwill of staff to cover additional hours to keep the doors open and the services running.
The reason staff are turning down additional hours is due to the tax they are having to pay on their pension savings once they reach the NHS Pension Scheme savings threshold. Some staff are even choosing to retire.
So what can employers do to keep staff on board? We are working with a number of clients to encourage staff to work and remain in service without worrying about pension tax. If you would like to know more please get in touch.