Good news on pensions

By Robin Stride

Doctors who were forced to move to the 2015 NHS Pension Scheme have been told they will not need to decide which set of compensation benefits they wish to receive until their time of retirement.

Previously, they were told that they had to choose now. 

Results of the so-called ‘McCloud’ consultation released last month, hailed as ‘good news’ by leading specialist medical accountants, concluded that doctors have the right to make a ‘deferred choice’ about which remedy benefits to take.

It can be the pension benefits from their previous 1995/2008 pension scheme or those from the 2015 scheme. 

The consultation also explored the option to make an ‘immediate choice’ now of which pension benefits to take for the remedy period, to run from 1 April 2015 to 31 March 2022.

When the 2015 scheme was introduced, older members – those within ten years of retiring – were allowed to continue with their final salary schemes in the 1995 or 2008 sections. 

But the Court of Appeal in 2018 found this discriminated against younger members in a case brought by judges (named McCloud) and firefighters. 

The Government has now agreed to redress this discrimination across all public sector pension schemes at an expected cost of around £17bn. 

Complex situation

Specialist financial planners Cavendish Medical called it ‘an extremely complicated situation’, but said the consultation outcome was generally accepted to be the better of the two options presented. 

Technical director Patrick Convey said: ‘In essence, it means that doctors will be able to choose the most lucrative scheme benefits by way of compensation when they come to retire. 

‘This, of course, does not make the calculations of the already fiendishly complex NHS pension any easier. The Government even recognised in the consultation that this outcome will still place an ‘administrative burden’ on the doctors – many of whom have already had the most challenging of years. 

‘They could be concerned that the last five years of tax calculations and annual allowance payments will need to be recalculated. It is also likely that the pension figure they have been working towards is now wrong’. 

He told Independent Practitioner Today: ‘In the next few months, we will be working through the finer details of this compensation scheme to ensure the doctors in our care have the best outcome.’

No further flexibility

Less welcome is the Govern­ment’s conclusion to a related consultation that no further flexibility will be introduced to NHS pension schemes. 

Mr Convey said: ‘It is disappointing that the Government received overwhelming feedback from medical and financial professionals in the consultation that confirmed the annual allowance was causing doctors to reduce shifts or retire early, and yet still ruled against introducing some flexibility. 

‘For example, this could have been an opportunity to allow doctors to change the rate at which their pensions grow in order to mitigate against annual allowance breaches. 

‘Instead, the Government stated that the tapered annual allowance rule changes introduced last year were enough to help the workforce crisis. We are not sure that is the case. 

‘The rules surrounding pensions and tax charges are still too complicated and excessively punitive for those working hard to help patients.’

 Cavendish Medical is staging a free pensions and tax webinar to help doctors understand the McCloud remedy. Click here to find out more.