Members of the NHS Pension Scheme will have the option of “partial retirement” under proposed government reforms aimed at stemming the flow of health workers leaving the NHS.
The government has faced pressure to fix the relationship between tax and NHS pensions, with former health secretary Thérèse Coffey pledging in September to correct rules that she admitted “can be a disincentive for clinicians who want to stay in the profession or return from retirement and help our national endeavour”.
The standard pensions annual allowance is £40,000. However, a taper lowers the annual tax-free allowance for pension contributions from £40,000 to as low as £4,000 for those NHS Pension Scheme members earning an “adjusted” income of more than £240,000 and a “threshold” income of more than £200,000.
Those that surpass the limit are hit with tax bills, while members also face a lifetime allowance of £1mn.
Announced on December 5, the Department of Health and Social Care will run a consultation for eight weeks, with reforms expected to be implemented in late spring 2023.
“We need a system where our most experienced clinicians don’t feel they have to reduce their workload or take early retirement because of financial worries,” health and social secretary Steve Barclay said.
“I also want to make it easier for staff that want to return to work to support the NHS to be able to do so without penalties.”
The British Medical Association suggested that the partial retirement proposal, and an attempt at providing greater flexibility for recently retired doctors, would have some potential benefits, but added that the reforms “fall well short of the long-term solution that the NHS desperately needs”.
“These proposed changes appear to be too little, too late,” BMA pensions committee chair Dr Vishal Sharma said.
Maximum drawdown rises from 80% to 100% of benefits
A recent BMA survey revealed that more than 40 per cent of consultants plan to leave the NHS over the next 12 months.
The government has acknowledged that the McCloud remedy may mean that some staff aged 55 and above are able to retire earlier than previously envisaged, which could impact on NHS capacity. A lack of partial retirement in the 1995 section of the scheme may deter staff from remaining in the workforce for longer than if there were more flexible options available to them, it said.
Under the government’s partial retirement proposal, NHS staff will be allowed to either claim all or a portion of their pension but continue to work and build more pension benefits.
It is proposing an amendment to the 1995 section regulations, to allow members to partially retire and claim up to 100 per cent of their 1995 section benefits while continuing to work and accrue more pension in the 2015 scheme.
Under this plan, on reaching the minimum pension age – which is currently 55 – members will become eligible to partially retire if they lower their pensionable pay by at least 10 per cent.
