The UK government has launched a consultation proposing to amend NHS Pension Scheme regulations, in line with the announcements made in its policy paper Our plan for patients.
It includes proposals to introduce partial retirement flexibilities to the 1995 Section of the scheme, to remove barriers for staff retiring and returning to work and to facilitate partial retirement for those who wish to do so.
It also introduces a solution to the Consumer Price Index (CPI) disconnect issue, to reduce the risk that some NHS staff, including senior clinicians, could face an annual allowance tax charge as a consequence of the high rate of CPI for September 2022.
Thirdly, the consultation proposes amendments to NHS Pension Scheme access policy to allow staff working in primary care networks (PCNs) to continue to access the scheme.
Finally, it proposes amendments to the member contribution structure to ensure general practitioners pay the correct contribution rate over a full scheme year.
The Department of Health and Social Care (DHSC) welcomes views on the proposals to amend NHS Pension Scheme regulations until 30 January 2023.
Eligible members of the NHS workforce belong to one of the two existing schemes. The final salary defined scheme, or legacy scheme, is made up of the 1995 and 2008 Sections and is now closed to new members.
All new NHS staff join the 2015 Scheme, a career average revalued earnings (CARE) scheme that provides benefits based on average earnings over a member’s career. The key differences between the schemes, other than the way benefits are calculated, are different normal pension ages (NPAs) and accrual rates.
The 2015 Scheme was introduced as part of wider reforms implemented by regulations made under the Public Service Pensions Act 2013. As part of these reforms, public service pension scheme members within 10 years of retirement were originally given transitional protection, and so remained in their legacy pension schemes.
In December 2018, the Court of Appeal found this protection to be discriminatory against younger members. This has become known as the ‘McCloud judgment’. The government accepted the judgment applies to other public service schemes, including the NHS, and has set out how the discrimination will be remedied. This is known as the ‘McCloud remedy’.
As a result of the McCloud remedy, all eligible staff were moved to the 2015 Scheme for future accrual from 1 April 2022. This means that some members will now have service in both the 1995 Section and 2015 Scheme, which have different rules on how members can claim their benefits.
The DHSC has therefore designed the proposed retirement flexibilities to address this issue and ensure that the rules are aligned for all members of the NHS Pension Scheme.
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