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NHS fails to deliver pension statements on time

NHS fails to deliver pension statements on time

The NHS Business Services Authority has failed to deliver almost 3,800 pension statements on time, threatening to create issues for scheme members' tax planning.

According to a written response to Parliament yesterday (September 9) from Health minister Chris Skidmore, some 17,187 members of the NHS Pension Scheme were provided with a pension savings statement in the 2018/19 financial year, of which 13,393 were completed on time.

The on-demand statements should be provided by the NHS Business Services Authority by the later of three months from the date of request, or by October 6 following the end of the relevant tax year, Mr Skidmore explained.

However, the issuance of these statements is dependent on the NHS Business Services Authority receiving the relevant data, such as pensionable pay.

Claire Trott, chartered financial planner and head of pensions strategy at St. James’s Place, said the statements were important for tax planning purposes because they are used to determine if there is a tax charge due for the client for the previous tax year.

She said they should be provided by default for all defined benefit pension scheme members at the first available opportunity each year.

She said: “The legislation currently only requires them to be sent to those who exceed the standard annual allowance (not their tapered annual allowance) in the tax year in question in that specific scheme.

“So, should a client be a member of more than one scheme their total could exceed the standard annual allowance and they wouldn’t get a statement from either scheme.

“In addition, as the scheme can’t know what the member's tapered annual allowance position is, members may not be triggered to look into it if they don’t get a statement.”

However she acknowledged it could be tricky to get the relevant data for some NHS employees.

She said: “For those who are employed in a hospital such as a consultant this is usually quite straightforward.

“However, for those on more complex contracts such as GPs this can take longer to get because their accounts will need to be completed before the NHS scheme can be given the figures they require.”

However, Steve Carlson, chartered financial planner at Cardiff-based Carlson Wealth Management, said the statements weren't needed providing there hasn't been a break in service.

He said that “it is possible to calculate an up to date pension entitlement for any NHS employee using the payslips and total reward statement which can be instantly downloaded by any NHS employee, although admittedly the calculations are complicated”.

It emerged in December that the number of members leaving the NHS Pension Scheme was five times higher than that seen by other public pension funds, most likely because of the effects of pension tax such as the tapered annual allowance.

Introduced in 2016, the tapered annual allowance gradually reduces the allowance for those on high incomes, meaning they are more likely to suffer an annual tax charge on contributions and a lifetime allowance tax charge on their benefits.