Pensions  

Govt urged to tackle NHS pensions amid staff retention fears

Govt urged to tackle NHS pensions amid staff retention fears
Credit: Pexels/EVG Kowalievska

The government has been encouraged to address NHS pensions in order to tackle staff retention issues, following the announcement of a sub-inflation pay rise of 4.5 per cent for eligible dentists and doctors.

The Department of Health and Social Care also published proposed uplifts to NHS Pension Scheme member contribution tier thresholds from October 2022.

According to a consultation published on July 19, most thresholds have been increased by £1,400, with the changes expected to lower contribution rates for 40 per cent of members. Contributions will, however, increase for members in the bottom three tiers of the scheme.

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In the meantime, the Review Body on Doctors’ and Dentists’ Remuneration urged the government to review NHS staff pensions, with staff retention a key concern. The NHS Business Services Authority reported a 35 per cent surge in retirement applications in the spring.

“While it is not our role to make explicit recommendations for pensions, it is clear […] that the recruitment and retention of senior doctors and dentists is being influenced by these issues, and therefore we would once again underline the importance of them being addressed,” the DDRB said.

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The ways NHS pensions are structured and taxed have been central to concerns about staff retention and retirements. The number of general medical practitioners to take voluntary early retirement rose to 704 in the 2020-21 period compared with 596 in the prior window, against voluntary early retirements of 605 in 2018-19.

The DDRB cited Hospital Consultants and Specialists Association concerns over the retention of senior doctors, with the HCSA saying that the percentage of doctors that it had surveyed who said they had made definite plans to leave had increased from 20 per cent to 29 per cent between 2020-21 and 2021-22.

Meanwhile, NHS Digital figures show that between April 2020 and March 2021, of those doctors and dentists that reported their reasons for leaving the hospital and community health sector, retirement was the third most likely reason for leaving.

In July, MPs called for a tax-unregistered NHS scheme as part of a push to stop early retirements and financial penalties falling on NHS staff.

“One of the biggest threats to the retention of the most senior and experienced NHS staff is the punitive and unfair interplay between long-standing government pension taxation policies and the NHS Pension Scheme,” Conservative MP Dan Poulter told parliament. 

Economic secretary to the Treasury Richard Fuller responded that it would be “hard to justify” further government support for doctors in the current climate.

The issue has been compounded by the ending of special coronavirus pandemic protections in March, which had encouraged recently retired staff to return to service. 

In January, Quilter predicted that more than 7,000 staff affected by the ending of the protections, which allowed retirees to return without incurring pension penalties, could elect to retire as a result.

The McCloud remedy, meanwhile, will create an additional retention risk covering 265,000 non-medical staff aged over 55, the NHS Pay Review Body noted.

The DDRB welcomed the government’s proposal to lift contribution thresholds, observing that this would probably help to avoid situations of staff members losing money as a result of their pay uplift moving them into a different contribution tier.