Newsflash: New NHS Pension consultation launched (and previous 50:50 consultation withdrawn)

A new consultation NHS Pension Scheme: pension flexibility has just been published. This is to address the significant concerns raised by GPs (and other clinicians), that the tax levied on the value of pension growth exceeding the tax-free allowance has been prompting many GPs to consider retirement or withdrawal from the NHS Pension Scheme.

It has now been recognised that the previously proposed 50:50 option does not provide sufficient flexibility for GPs to balance their pay, pension growth and tax liability. Accordingly, the 50:50 consultation has been withdrawn and this new consultation presents a package of new proposals that go significantly further. These include:

  • giving GPs the ability to choose a personalised pension growth level at the start of each tax year and pay correspondingly lower contributions (the level chosen would be a percentage of the normal full accrual level in any 10% increment);
  • allowing them to adjust the level of accrual towards the end of the year, which will have retrospective effect from the start of that year;
  • enabling the amount by which a large increase in pensionable earnings contributes to their pension to be phased over a number of years, to smooth spikes in pension growth that can cause sudden tax charges;
  • providing greater transparency in the Scheme Pays facility, by providing annual member benefit statements showing the Scheme Pays deduction as a pension debit, the corresponding adjustment to pension at retirement and comparing this with how the accrued pension would otherwise increase over time.

The overall aim of these proposals is to enable GPs to tailor pension accrual by managing both the annual and lifetime allowance liability, thereby slowing down pension growth to enable individuals to reach the lifetime allowance limit at a point in time that matches their target retirement age.

The consultation closes on 1 November 2019 and, in the meantime, the Government has asked NHS Employers to publish short-term guidance on possible local approaches that employers can consider taking to mitigate the impact of tax payable on pension growth during this tax year.

If you would like to find out more about this consultation and how to respond to it or the impact that tax payable on pension growth is having on your partnership, please contact our specialist team.

We have also developed a training programme on this, and other topical themes, which we would be happy to discuss with you. Download the training programme HERE.


Contact our GP advice line

Dial 020 7839 0278 and ask for the GP Advice Line.

Our team of experts can offer GPs and members of their teams up to ten minutes’ free preliminary advice with a solicitor.