The British Medical Association is expected to push for the expedition of the McCloud remedy and the introduction of pension recycling rules in the NHS Pension Scheme, after backing from its members in its annual representative meeting.
Motion 15 at the BMA’s conference on June 27 demanded “that the BMA ensures that the remedial measures following the McCloud judgment should be expedited”.
Motion 16, meanwhile, noted “the significant number of senior doctors who are coming off the pension scheme and still working for the NHS to deliver high-quality care to the UK population due to punitive pension taxation”.
It demanded support for employers to offer the recycling of pension contributions. In this context, pensions recycling involves passing on unused employers' pension contributions to an opted-out member of the pension scheme as part of their total reward.*
The government needs to introduce a tax-unregistered scheme to ensure doctors and other NHS workers are not forced to retire
Dr Vishal Sharma, British Medical Association
‘Members took consequential decisions’
In November, the BMA threatened legal action in response to government plans to make its members pay for the cost of the McCloud remedy.
The government’s original response to the NHS 2015 scheme’s valuation in 2016 pledged “improved pension benefits” for employment between 2019 and 2023, but this changed when the cost-control mechanism was paused in 2019 in response to the McCloud ruling.
Once the pause was lifted, the government said it intended to transfer the cost of the McCloud remedy to the 2016 valuation.
In addition to accelerating the McCloud remedy, Motion 15 also supported senior doctors being able to assess their tax liability with the recalculated annual benefit statements for the remedy period, which spans 2015 to 2022.
In response to the passing of Motion 15, BMA pensions committee chair Dr Vishal Sharma said: “Doctors have been left with significant uncertainty regarding not only their current level of pension savings but any associated tax liability they may have, while they wait for the government to arrange remedial measures following the McCloud judgment.
“It is essential that members are provided with clear and timely information about their benefits and that the government bears the cost of any additional member costs that are incurred.
“We are also aware that many of our members took consequential decisions as a result of being subjected to this unlawful discrimination, such as opting out of the scheme or retiring early,” he continued.
“We firmly believe that the government should allow members to reverse any such decisions and will continue to lobby for this.”
‘A cost neutral option’
The standard annual allowance for pension saving before tax charges apply is £40,000.
The BMA has previously criticised NHS England and NHS Improvement for what it calls “misleading” information about “punitive pensions taxation” and its impact on staff retention.
The Times has reported NHS efforts to seek the postponement of doctors’ retirements. NHS England has written to hospital leaders asking them to entice retired doctors back to work and to encourage those due to retire to postpone that decision and continue working.
A notice on the NHS Business Service Authority website acknowledges “an increasing number of enquiries to our contact centre from members who are planning to retire”.
In a written question in parliament on April 25, Conservative MP Dr Dan Poulter asked health secretary Sajid Javid for an assessment of the impact on NHS staffing and retention of the £40,000 annual pension threshold for both pension contributions and the annual increase in total pension value.
Health minister Edward Argar said in response: “It is not possible to isolate the impact of a single factor such as the annual allowance on staff choosing to reduce their working hours or take early retirement.
“The annual increase in pension value for the vast majority of NHS staff is expected to be within the £40,000 annual allowance for tax-free pension saving and is unlikely to impact retention.
“However, the highest earners within the NHS will find that the generosity of the NHS Pension Scheme means they exceed their annual allowance. Where this occurs, the scheme pays facility is a proportionate means to meet the cost of an annual allowance charge from the value of pension benefits.”
In response to the backing of Motion 16, Sharma said: “The BMA will continue to campaign for all employers to offer pension recycling, which provides an alternative way for higher earners to maintain the value of employers contributions.
“This is a cost neutral option to trusts to allow them to retain their senior workforce.
Govt to push ahead with firefighters and police McCloud reforms
The government will press ahead with planned reforms implementing the McCloud remedy with respect to members of the police and firefighters’ pension schemes, making amendments to ill-health provisions for the latter, despite concerns the remedy might itself be discriminatory.
“We are clear, however, that pension recycling is a sticking plaster for the underlying problems with the current pension taxation system,” Sharma continued.
“As a long-term solution, the government needs to introduce a tax-unregistered scheme to ensure doctors and other NHS workers are not forced to retire, or reduce their hours, to avoid punitive charges.
“This is a fundamentally fair system both to pension scheme members and to the taxpayer, and not only ensures that doctors are paying the correct rate of tax but crucially removes the disincentives that are currently preventing many doctors from taking on additional hours or delaying retirement.”
*This article has been amended to update the definition of pensions recycling.
