Pensions  

NHS pension reform still avoids the main problem

Steve Webb

Steve Webb

At first sight, this package looks like a big step forward but it is still far from ideal.

First, doctors now have far more options than before, including potentially opting out of their pension altogether in a matter of weeks. 

The government says: “the Department of Health and Social Care will work with NHS employers and the BMA to ensure senior clinicians have access to the support they need to understand the scheme and how these changes operate, enabling them to make informed decisions”. 

But it is far from clear where all this expert financial advice is going to come from, especially if some doctors will want to make big decisions in a matter of weeks.  There is a huge advice opportunity and need here, but matching doctors to advisers with the necessary specialist knowledge will be a real challenge.

Second, the NHS Pension scheme is going to be made far more complex (for senior staff) in order to resolve problems caused by the pension tax relief system.  A far better solution would be to go straight for the root of the problem and abolish the tapered annual allowance.

Finally, the Treasury review of the taper may come to nothing. 

The much broader choices that will be available to doctors under the NHS pension scheme (including taking cash in lieu of pension) may take the steam out of this issue. 

If so, the Treasury will feel under much less pressure to reform pension tax relief and the absurd complexity of the tapered annual allowance could easily remain with us for years to come.

Steve Webb is Director of Policy at Royal London.  His policy paper  – ‘Finding the Right Medicine – how to fix the problems between doctors and their pension scheme’ can be found at www.royallondon.com/policy-papers