The drama continues with the NHS pension scheme

If the NHS pension scheme was a fictional organisation in a TV drama, I am sure the current plot with its twists and turns would be too unbelievable to broadcast! 

If you have read our latest blog regarding the timings for changes to the NHS pension scheme during 2023, you will know there is a lot going on! (slight understatement).Changes and postponements to your NHS pension scheme

We have now learnt there are changes to the changes!

For the tax year 2022/23 the NHS may not be providing any annual allowance figures as a side effect of the McCloud postponement (see below).  

But wait for it… will be expected to report excess growth to the HMRC and pay the tax charges resulting… let me repeat, without knowing your annual allowance growth figures.

What can I do about it?

1.  NHS online ready reckoner

The NHS has its own online ready reckoner which would be a good place to start for anyone with concerns. The aim of this tool is:

  1. To provide members of the NHS pension scheme with a broad insight into their annual allowance (AA) position.
  2. Give an indication as to whether or not the tapered AA may apply to their circumstances.
  3. Provide an estimated breakdown of the total annual cost of scheme membership.
  4. Estimate how much their NHS pension is projected to increase

Follow this link to see if this will be enough for you: Purpose of the Ready Reckoner > 

2.  Assume you have excess annual allowance growth

The next option is to assume you have excess AA growth and apply for Scheme Pays for £1, ticking the box that confirms this figure is an estimate and wait and hope it’s resolved later.

Or, if you are not comfortable with either of the above and have some concerns, you may prefer option three and have an expert cast their eye over your figures.

3.  Have your figures worked out by experts

As detailed in our article: NHS pensions: Informed decisions are better decisions > we offer a specialist NHS Pensions Analysis Service that will give you clarification, estimate your tax positions and project your figures forward so you can make informed decisions about your financial situation, and the NHS Pension scheme.

Although the NHSPS is not making this easy for you, you can still get to a place of knowledge that enables you to make better-informed decisions.

Other NHS pension scheme news

Postponement #1

The long-awaited McCloud remedy part 1: Annual Allowance “Rollback” where NHS pension growth will be recalculated as if you were in the 1995/2008 scheme between 2015-2022 has been postponed. Instead of this starting in October 2023, it will begin a year later in October 2024.

Potentially this impacts those waiting for the remedy before retiring. However, the NHS pension scheme has said that if you have already retired and your benefits improve post-McCloud, you will take priority in the amendments. 

If you are planning on retiring and want to know the potential effects of the McCloud Remedy on your benefits, we can look at this for you with our NHS report, so get in touch to discuss further. 

Postponement #2

One of the previously announced pension flexibilities designed to retain staff and halt staff exodus has had a setback.

In April this year, the ability to draw your 1995 NHS pension and continue to work was due to be introduced. This was a modification to the existing ‘retire and return’ rules and was welcomed by many as a way to access their original NHS pension, carry on in a job they enjoy and reduce or avoid altogether the dreaded annual allowance tax penalties that have dogged so many in recent years. 

Although pension benefits could continue to build up with the 2015 scheme, there would be no imperative to do so. However, if a doctor chose to contribute to the 2015 scheme, growth within the 1995 scheme would no longer be taken into account as it would be in payment. I have a good number of clients poised to utilise this option.

The option to retire and draw your 1995 section of the pension in April will remain. However, the ability to draw your 1995 pension and stay on the same contract has been postponed until October 2023. The control of the contract is vital too many, so this delay has caused much frustration.

As ever we will keep you as up to date as possible as the NHS releases further information. If you do need further clarification – we are here to help.

Whatever happens, I think it’s safe to say it’s not going to be a quiet year when it comes to NHS pensions!

Do any of the issues covered in this article affect you? Let us know by leaving a comment below

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